Great Artesian Basin Sustainability Initiative (GABSI)
Value for Money Review
FINAL REPORT
Department of the Environment | January 2014
GABSI Value for Money Review
GABSI Value for Money Review
Document title:
GABSI Value for Money Review
Document no.
3
Version:
Final
Date:
January 2014
Prepared by:
Michelle Freund, Sarah Alexander
Approved by:
Andrew Tingay, Ray Evans
Sinclair Knight Merz
ABN 37 001 024 095
214 Northbourne Avenue
Braddon ACT 2612 Australia
PO Box 930 Dickson ACT 2602 Australia
T +61 2 6246 2700
F +61 2 6246 2799
www.globalskm.com
COPYRIGHT: The concepts and information contained in this document are the property of Sinclair Knight Merz Pty Ltd (SKM). Use or copying of
this document in whole or in part without the written permission of SKM constitutes an infringement of copyright.
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GABSI Value for Money Review
Executive summary
In 1999, the Australian Government and Queensland, South Australian, New South Wales (NSW), and Northern
Territory Governments committed to a 15 year joint program to sustainably manage the groundwater resources
of the Great Artesian Basin (GAB) – the Great Artesian Basin Sustainability Initiative (GABSI). GABSI seeks to
promote sustainable groundwater management systems for the GAB, primarily through capping and piping
uncontrolled bores to save water and recover pressure. The GABSI is being delivered by state agencies over
three phases, with the third phase drawing to a close on 30 June 2014.
Under the GABSI National Partnership Agreement, independent mid-term reviews of each phase have been
required to assess the impact of GABSI works and examine the implications of the findings for the remainder of
the phase. The mid-term review for GABSI 3 found that significant achievements had been accomplished and
that future groundwater management in the GAB should be based on a thorough assessment of priorities,
eligibility criteria, and funding arrangements. It also recommended conducting a value for money review of
GABSI across the three phases, and the development of objective metrics to determine whether continued
government funding could be justified beyond GABSI 3.
Sinclair Knight Merz (SKM) was engaged by the Commonwealth Department of the Environment (Department)
to undertake a value for money review (the Review) of GABSI using a total economic valuation (TEV) approach.
The objectives of the Review (as per the Request for Quotation dated 6 September 2013) are to:

Objectively measure trends in the return on investment achieved by respective governments
(Commonwealth and States) over the three phases of GABSI, up to June 2013.

Assess whether the completion of GABSI 3 represents value for money, compared to the return on
government investment over the three phases of GABSI, up to June 2013.
GABSI funding and achievements
GABSI funding is shared between the Commonwealth Government, the State Governments, and landowners.
However for the purpose of this Review, only government costs have been considered within scope as the
focus is on governments’ return on investment. GABSI has cost government $238.68 m in real dollars ($373.58
m in present value) to June 2013, or $270.34 m (real) including estimated works for 2013/14. Between 1999/00
and 2012/13, 647 bores have been controlled, 19,178 kilometres of bore drains deleted, and 28,345 kilometres
of piping installed. These works have resulted in estimated annual water savings of 204,527ML.
Objective 1: Objectively measure trends in the return on investment achieved by respective governments
(Commonwealth and States) over the three phases of GABSI, up to June 2013.
Using the total
economic
valuation (TEV)
approach, the
benefit-cost
ratio (BCR) of
GABSI is likely
to be between
0.56 and 1.7.
The TEV framework comprised nine components, three of which were able to be
quantified based on available data (refer Section 3.1). These were the consumptive
benefits from reallocated saved water, indirect benefits to rural communities, and
greenhouse gas abatement benefits. Together, they provided $163.48 m in real 2013
dollars or $210.35 m in present value for the full GABSI program until June 2013. This
represents a BCR of 0.56 across GABSI.
In addition to only measuring three of the nine components of TEV, this approach only
values 35% of the water saved through GABSI in the case of consumptive benefits from
reallocated saved water and indirect benefits to rural communities. This is because
government has limited reallocation of saved water for consumptive use to 50% in South
Australia and 30% in Queensland and NSW. Thus, the governments’ rationale is that
the benefits of returning saved water to the GAB for the purpose of pressure recovery
are greater than (or equal to) the benefits of reallocating the water for other consumptive
purposes. Assuming that 100% of the saved water is reallocated for consumptive
use achieves an overall BCR of 1.4 (refer Section 6.1).
Another approach to provide a more comprehensive view of the value of the program is
a breakeven assessment (refer Section 6.2). This considers some of the benefits not
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GABSI Value for Money Review
quantified in terms of what would be required for the TEV to at least equal the cost (i.e.
achieve a BCR of 1). Each benefit was considered in isolation, which means that only
0.04 endangered species or 12% of unique ecosystems would need to be
protected for a BCR of 1. In addition, if half of breakeven pressure was restored
(5.5m) and half the breakeven number of avoided pumps delivered (403), the BCR
would equal 1.7.
Substantial and
tangible nonfinancial
benefits are also
associated with
GABSI.
The BCR for
each jurisdiction
delivering
GABSI has
become more
similar over the
program life.
Substantial and tangible non-financial benefits are also associated with GABSI, however
these were unable to be quantified due to insufficient data. These include benefits such
as:

Consumptive benefits from improved pressure – In Queensland, by 2005 an
increase in pressure in half of all artesian bores monitored was observed. In NSW,
anecdotal evidence suggests around 90% of capped bores have been found to
have either stabilised or increased pressure over the GABSI period. Pressure
recovery has also been observed at Little Blyth bore as a result of
decommissioning Big Blyth bore in South Australia. Such pressure improvements
are expected to result in avoided pump installation and pumping (energy) costs.

Tourism, recreation and amenity benefits – A number of key tourism and
recreation sites across the three states depend on the GAB. For instance,
Dalhousie Springs in South Australia was found to contribute $0.6m/annum in
recreation benefits resulting from reduced water extraction under GABSI (Rolfe,
2008). However the benefits directly attributable to GABSI have not been
considered in any other studies.

Heritage benefits – There is significant evidence of Indigenous occupation and
use recorded within GAB spring wetlands, and numerous cultural heritage sites
requiring protection.

Option value, bequest / altruism, and stewardship values – Relates to the value
placed on GABSI by those who anticipate using GAB water or visiting the springs at
some point in the future, or are willing to pay for the existence of the GAB out of a
sense of stewardship. For example, conservation group ‘Bush Heritage Value’
purchased the Edgbaston Reserve in Queensland in 2008 to conserve the natural
springs and ecosystems they support.

Conserving biodiversity (avoided loss of unique ecosystems and endangered
species) – The GAB once sustained approximately 500 complexes of permanent
springs and supports numerous endemic species. There are legislative obligations
on both the Commonwealth and states to protect the environmental value provided
by the GAB. These obligations suggest governments’ willingness to protect these
assets, and thus imply an intrinsic public value.
In Phase 1, South Australia’s BCR for GABSI works was significantly higher than in
NSW and Queensland (2.96, compared to 0.79 in Queensland and 0.44 in NSW). This
may be due to the relatively smaller scale of the program in South Australia and the
ability for government to prioritise the bores to be controlled (South Australian
landholders do not provide contributions in the same way as in Queensland and NSW).
Furthermore, South Australia was able to reallocate 50 per cent of water saved as per
their implementation plan (compared to 30 per cent in NSW and Queensland), which
increases the total quantified benefits relative to the other jurisdictions.
Over Phases 2 and 3 however, the BCR of GABSI for each jurisdiction has become
increasingly similar, with Phase 3 BCRs ranging from 0.29 in NSW to 0.47 in South
Australia (these represent the minimum BCRs based on the three quantified TEV
components as described above).
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GABSI Value for Money Review
Objective 2: Assess whether the completion of GABSI 3 represents value for money, compared to the
return on government investment over the three phases of GABSI, up to June 2013.
The value for
money and costeffectiveness of
GABSI appear to
be decreasing
between the
three phases.
However it is
important to
view GABSI as a
whole, as
benefits from
previous phases
may be lost if
the program is
not completed.
The BCR of the quantified benefits of GABSI decreased from 0.77 in Phase 1 to 0.45 in
Phase 2 and 0.33 in Phase 3. Similarly, the cost-effectiveness of GABSI has been
declining ($835/ML/annum in Phase 1, $1,280/ML/annum in Phase 2, and
$1,749/ML/annum in Phase 3).
However, governments have prioritised works which are technically more feasible or
expected to achieve greater savings in the initial stages, leaving more difficult and / or
costly works for the later stages. Furthermore, the increase in the price of construction
and materials has been high relative to consumer price index (CPI) over the period of
GABSI, making works undertaken in later phases comparatively more expensive.
It is also likely that benefits from previous phases as measured by the current approach
would diminish if GABSI is not completed. While it is assumed that benefits achieved in
previous phases are preserved (or do not degrade) over future time, in reality the
increased pressure will lead to an incremental increase in losses via other bores. This is
because the main contribution to overall benefits is the monetary value of the
groundwater that is reallocated, so later phases of the GABSI program act to preserve
these reallocated water benefits. However in terms of restoring pressure to the aquifer
system, previous gains in pressure re-establishment will not erode over time. The BCR
for earlier phases may remain stable if pressure is incorporated into the assessment and
the benefits of pressure reestablishment outweigh those from reallocating saved water.
Therefore assessing each phase in isolation, whilst a useful and prudent fiscal exercise,
does not provide a holistic view of the program, and there is value in viewing the total
costs and benefits of the program to date as a whole. For instance, the initial planned
cost-effectiveness as outlined in the GAB Strategic Management Plan can be used as a
benchmark for comparison purposes, and is set at $1,682/ML/annum (2013 dollars). To
date, GABSI has outperformed well beyond this benchmark by progressing its program
of works at an average of $1,167/ML/annum.
Jurisdictions provided estimates of works under GABSI that will remain to be completed
at June 2014. These remaining works have a cost-effectiveness figure of
$1,852/ML/annum (although this figure varies greatly, with estimates ranging from
$4,286/ML/annum in NSW to $1,042/ML/annum in Queensland). While this is again
higher than all three phases of GABSI, when viewing the program as a whole the costeffectiveness of completing GABSI would be $1,430/ML/annum, which is still lower than
the initial benchmark of $1,682/ML/annum. It is also important to note that costeffectiveness does not consider the benefits of achieving the ML saved targets, so
should not be viewed as a VfM assessment.
A clear and
detailed set of
metrics to
measure the
value of GABSI
have been
developed.
Better data
collection
aligned with
these metrics
could assist in
proving GABSI’s
value for money.
Document no.: SB20354, FINAL
A set of metrics has been proposed for measuring each component of the TEV
framework. These relate directly to GABSI, and highlight key data and information gaps
that would need to be filled to undertake a more complete assessment of the program’s
value for money. Examples of these gaps include:

Data on the market price of GAB groundwater (time and geographic coverage of
the sample of prices available was limited, and there were restrictions placed on
the previous sale of GAB water which could have affected the market price)

Data and pressure modelling to understand the direct relationship between GABSI
and pressure recovery (change in pressure head)

Number of visitors to and average length of stay at key tourism sites dependent on
the GAB

Avoided loss of biodiversity and / or endangered species resulting from GABSI
While gathering this data could assist in proving GABSI’s value for money, the costs
associated with conducting more extensive monitoring programs are likely to be high
and therefore may not represent value for money.
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GABSI Value for Money Review
Summary of the benefits of GABSI
using the TEV framework
The following figure provides an
overview of the TEV framework applied
in the Value for Money Review of
GABSI.
The ‘quantified benefits’ represents the
components of the framework which
were able to be quantified based on
available data. The ‘breakeven benefits
required’ demonstrate what improve
pressure and environmental benefits
would need to be proven to achieve a
BCR of 1 (note that each breakeven
metric should be considered in isolation
of the others – e.g. avoiding a 12% loss
of unique ecosystems alone would
achieve a BCR of 1).
All dollars in the figure are in real 2013
dollars and consider benefits associated
with works deliver under GABSI between
1999/2000 and 2012/13.
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GABSI Value for Money Review
Contents
1.
Introduction ................................................................................................................................................................................... 1
1.1
Objectives of Review ...................................................................................................................................................................... 1
1.2
Report structure .............................................................................................................................................................................. 1
2.
Description of the GABSI ............................................................................................................................................................. 2
2.1
Roles and responsibilities ............................................................................................................................................................... 2
2.2
Funding ........................................................................................................................................................................................... 3
2.3
Achievements ................................................................................................................................................................................. 4
3.
Review methodology .................................................................................................................................................................... 6
3.1
Total economic valuation framework .............................................................................................................................................. 6
3.2
Overarching assumptions and considerations ................................................................................................................................ 7
3.3
Data and information sources ......................................................................................................................................................... 8
3.4
Limitations ....................................................................................................................................................................................... 8
4.
Measuring the benefits of GABSI .............................................................................................................................................. 10
4.1
Consumptive benefits ................................................................................................................................................................... 10
4.2
Non-consumptive benefits ............................................................................................................................................................ 18
4.3
Indirect value ................................................................................................................................................................................ 22
4.4
Option value, bequest / altruism, and stewardship values ............................................................................................................ 24
4.5
Environmental benefits ................................................................................................................................................................. 25
4.6
Summary....................................................................................................................................................................................... 33
5.
Sensitivity analysis ..................................................................................................................................................................... 38
6.
Alternative evaluation approaches ........................................................................................................................................... 40
6.1
TEV from alternative water use options (100% reallocation of GABSI water) .............................................................................. 40
6.2
Breakeven benefit analysis ........................................................................................................................................................... 41
6.3
Cost effectiveness......................................................................................................................................................................... 43
7.
Conclusion .................................................................................................................................................................................. 45
Appendix A. References
Appendix B. Deprival method values
Appendix C. Quantified Value for Money Summary
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GABSI Value for Money Review
1.
Introduction
In 1999, the Australian Government and Queensland, South Australian, New South Wales (NSW), and Northern
Territory1 Governments committed to a 15 year joint program to sustainably manage the groundwater resources
of the Great Artesian Basin (GAB) – the Great Artesian Basin Sustainability Initiative (GABSI). GABSI seeks to
promote sustainable groundwater management systems for the GAB, primarily through capping and piping
uncontrolled bores to save water and recover pressure. The GABSI is being delivered by state agencies over
three phases, with the third phase drawing to a close on 30 June 2014.
Under the GABSI National Partnership Agreement, independent mid-term reviews of each phase have been
required to assess the impact of GABSI works and examine the implications of the findings for the remainder of
the phase. The mid-term review for GABSI 3 found that significant achievements had been accomplished and
that future groundwater management in the GAB should be based on a thorough assessment of priorities,
eligibility criteria, and funding arrangements. It also recommended conducting a value for money review of
GABSI across the three phases, and the development of objective metrics to determine whether continued
government funding could be justified beyond GABSI 3.
Sinclair Knight Merz (SKM) was engaged by the Commonwealth Department of the Environment (Department)
to undertake a value for money review (the Review) of GABSI using a total economic valuation (TEV) approach.
1.1
Objectives of Review
The objectives of the Review (as per the Request for Quotation dated 6 September 2013) are to:

Objectively measure trends in the return on investment achieved by respective governments over the three
phases of GABSI, up to June 2013

Assess whether the completion of GABSI 3 represents value for money, compared to the return on
government investment over the three phases of GABSI, up to June 2013
1.2
Report structure
The report contains the following sections:

2 – Description of the GABSI: outlines the roles and responsibilities associated with administrating and
implementing the program, funding, and achievements to date.

3 – Review methodology: introduces the TEV framework approach and discusses the assumptions, data,
and limitations associated with the approach.

4 – Measuring the benefits of GABSI: detailed description of the relevant methods, a suggested metric,
and the results for each element of the TEV framework.

5 – Sensitivity analysis: tests the results of section 4 against seven key sensitivities.

6 – Alternative evaluation approaches: provides three different approaches to assessing GABSI that
should be considered in conjunction with the TEV approach.

7 – Conclusion: presents a concluding discussion on assessing the value for money of GABSI.
1
Northern Territory was involved in the monitoring network aspect of the program rather than infrastructure renewal (capping and
piping of bores) and has therefore not been included in this VfM Review.
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GABSI Value for Money Review
2.
Description of the GABSI
The GABSI is a 15 year program seeking to save water to address declining pressure in the Great Artesian
Basin (GAB). The GABSI is being delivered by state agencies over three phases, with the third phase drawing
to a close on 30 June 2014. In 2010, an NPA on the GABSI was established and agreed upon by the
Commonwealth and States (New South Wales, Queensland, South Australia), setting the direction for future
GABSI activities. The objectives, outcomes, and outputs of the NPA are outlined in Figure 1.
The remainder of this section outlines the roles and responsibilities, processes, and financing arrangements
associated with GABSI.
Figure 1: NPA on the GABSI – Objectives, outcomes, and outputs
2.1
Roles and responsibilities
The core governance and management structure is outlined in Figure 2. It comprises:

Commonwealth Department of the Environment – responsible for partly funding the works, and
establishing and overseeing the national approach to managing the resources of the Great Artesian Basin.

State Departments – responsible for partly funding the works, engaging landholders, undertaking some of
the works, and monitoring and reporting progress.

Landholders – responsible for partly funding the works, undertaking works on their properties, and
ongoing maintenance.

GABCC – the primary role of the Committee is to provide advice to Ministers on efficient, effective and
sustainable whole-of-resource management of the GAB and to coordinate activity between stakeholders.
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GABSI Value for Money Review
Figure 2: GABSI government and management structure
2.2
Funding
The costs associated with the program are primarily associated with:

Piping and capping capital costs (installation, materials and design);

Pipe and network operating and maintenance costs; and

Education and support programs.
The major costs involved with the GABSI program are the capital works, with operation and maintenance costs
being the responsibility of the landowners.
GABSI implementation costs are shared between the Commonwealth Government, the jurisdictions, and
landowners. Funding arrangements vary between States. For example, in GABSI 3, Queensland landholder
contributions were approximately 20% for bore rehabilitation and 40% for drain replacement and NSW
landholder contributions were 20% for bore rehabilitation and between 30% and 60% for drain replacement
(depending on zone). Landholders in South Australia are not required to contribute financially to any capital
works (however landholders did contribute in Phase 1). The following table summarises government
expenditure on GABSI across the three phases.
Table 1: Funding over the three phases of GABSI (nominal $)
Phase 2
(2004/2005 –
2008/2009)
Phase 3
(2009/2010 –
2012/2013)
Remaining Phase
3 (2013/2014)
Total
Funding source
Phase 1
(1999/2000 –
2003/2004)
Commonwealth
28.39
39.89
30.95
15.83
115.06
South Australia
1.75
0.20
2.25
1.60
5.8
New South Wales
12.34
15.79
13.00
7.40
48.53
Queensland
13.23
23.88
16.49
6.83
60.43
Total
(government)
55.71
79.76
62.69
31.66
229.82
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GABSI Value for Money Review
2.3
Achievements
GABSI achievements are typically summarised as works completed and water saved. These results are based
on annual reports provided by the GABCC and input from jurisdictions. The tables below summarise the key
achievements under GABSI to date in terms of works undertaken in each of the jurisdictions. Note that these
tables are based on actual works completed (i.e. up to June 2013 for Phase 3, excluding potential 2013/14
works).2
Table 2: Number of bores controlled
Bores controlled
pre GABSI (prior
to July 1999)
Bores controlled
under GABSI
Phase 1
Bores controlled
under GABSI
Phase 2
Bores controlled
under GABSI
Phase 3 (up to
June 2013)
TOTAL bores
controlled
under GABSI
South Australia
230
10
4
8
22
New South Wales
86
111
117
63
291
Queensland
312
150
89
95
334
TOTAL
628
271
210
166
647
State
Table 3: Kilometres of bore drains deleted
Bores drains
deleted pre GABSI
(prior to July 1999)
Bores drains
deleted under
GABSI Phase 1
Bores drained
deleted under
GABSI Phase 2
Bores drained
deleted under
GABSI Phase 3
(up to June 2013)
TOTAL bores
drained deleted
under GABSI
NA
185
0
11
196
New South Wales
1,391
3,409
3,036
1,698
8,143
Queensland
1,843
4,774
4,211
1,854
10,839
TOTAL
3,234
8,368
7,247
3,563
19,178
State
South Australia
Table 4: Kilometres of piping installed
Piping installed
pre GABSI (prior
to July 1999)
Piping installed
under GABSI
Phase 1
Piping installed
under GABSI
Phase 2
Piping installed
under GABSI
Phase 3 (up to
June 2013)
TOTAL piping
installed under
GABSI
NA
439
0
25
464
New South Wales
2,812
6,285
5,256
2,809
14,350
Queensland
2,698
6,384
4,491
2,656
13,531
TOTAL
5,510
13,108
9,747
5,490
28,345
State
South Australia
The completion of these works has resulted in significant water savings across the GAB as outlined in the
following table.
2
The data contained in these tables for Phase 3 and 2012/13 achievements was provided directly by jurisdictions and was accurate
as of 29 November 2013.
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GABSI Value for Money Review
Table 5: Water savings (ML/year)
Water savings
pre GABSI (prior
to July 1999)
Water savings
under GABSI
Phase 1
Water savings
under GABSI
Phase 2
Water savings
under GABSI
Phase 3 (up to
June 2013)
TOTAL water
savings under
GABSI
South Australia
39,542
17,017
742
2,579
20,338
New South Wales
9,051
26,093
25,075
13,803
64,971
Queensland
63,205
48,657
49,167
21,393
119,217
TOTAL
111,798
91,768
74,984
37,775
204,527
State
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GABSI Value for Money Review
3.
Review methodology
3.1
Total economic valuation framework
Return on investment from GABSI, across each phase and for the program as a whole, is most accurately
assessed using a total economic value (TEV) assessment framework to measure the full range of benefits from
the program. The TEV framework categorises the benefits from the GABSI program based on the full range of
use and non-use benefits, where:
TEV = direct-use value + indirect-use value + options value + bequest value + existence value
Figure 3: Total economic value framework for GABSI
Categorisation of use and non-use value applied in this assessment is presented in Figure 3 and includes the
following:

Direct use value. This refers to values arising from the direct consumptive and non-consumptive
benefits from GABSI. Consumptive benefits relate to the benefits to water users from the consumption of
GAB water – e.g. consumption of water saved or from the improved efficiency of consumption of GAB
water as a result of any pressure recovery; GAB pressure; and non-consumptive benefits are from
improved recreational, tourism, heritage, and amenity benefits. They also include benefits to landowners
participating in the scheme that realise land management benefits such as pest and weed control to private
and public landowners.
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GABSI Value for Money Review

Indirect value. This refers to the indirect support that GABSI has on communities and their economic
performance. These communities may not directly depend on the GAB water directly, but rather on the
industries that the water supports.

Option value. This refers to the value one places on protecting or enhancing the option of deriving benefit
from the GAB sometime in the future.

Bequest / altruism value. This refers to the value that the public may hold in preserving or enhancing the
value of the GAB for future generations.

Existence value. This refers to the value one places on protecting or enhancing the GAB for its intrinsic
existence value. Individuals place a value on the GAB’s existence, even if they have no intention of using
its resources or visiting the site.
The benefits illustrated in Figure 3 have been colour-coded according to whether they have been considered
quantitatively or qualitatively (or a combination of both) in the assessment.
A key aspect of the TEV assessment is that only the incremental benefits are being considered. Many of the
existing studies which estimate the value of groundwater consider the value of activities relying on existing
groundwater usage (and the value of maintaining these activities in the absence of / reduce groundwater
usage). This assessment considered the additional value (use and non-use) that would be realised from
additional groundwater being made available or from GAB pressure being recovered.
TEV on its own does not measure value for money (VfM). VfM is assessed as the TEV per dollar invested in the
program. The condition criteria for VfM are as follows:
VfM condition Criteria

VfM = TEV (present value) /$ investment (present value) = Benefit Cost Ratio (BCR)

BCR>1 implies Value for Money, where the TEV (present value) is greater than the cost of the program.
Overall, there is a net economic benefit to society.

BCR<1 implies that cost of the program (present value) exceeds the TEV (present value) and there is a net
cost to society.
3.2
Overarching assumptions and considerations
The key considerations and assumptions relevant to the TEV assessment are:

The assessment only considers the benefits that are directly attributable to investment undertaken as part
of GABSI. When considering the impacts of individual GABSI phases, only benefits that are directly
attributable to investment undertaken in that phase are considered.

All expenditure is presented in current (2013) dollars unless stated otherwise. ABS Consumer Price Index
(CPI) was used to convert dollars to 2012/13 dollars.

Where possible, value for money is assessed as the ratio of TEV per dollar invested. For these
calculations, the present value of the program’s costs and benefits are estimated, giving consideration to
the timing of expenditure and benefits. Given the program started in 1999/2000 and the benefits will
continue to be realised for many years to come, the present value of the program overall incorporates the
costs and benefit that have occurred prior to 2013 (escalated to the present), and the discounted value of
the costs and benefits that are anticipated to occur future years. A discount rate (or annual rate of interest
where future value is estimated) is assumed to be 7% (real) consistent with the recommended approach on
the Commonwealth Governments cost benefit analysis guidance material 3. The sensitivity analysis also
tests a discount rate of 3% and 10%.
3
Commonwealth Guidance Note: Cost benefit analysis in regulatory impact assessments (2013) - The OBPR
requires calculation of net present values at an annual real discount rate of 7 per cent3.
(http://www.finance.gov.au/obpr/cost-benefit-analysis.html#CBA_Guidance_Notes)
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GABSI Value for Money Review

The assessment has been undertaken over the period 1999/2000 from GABSI commencement to 2044.
This assessment period allows for 30 years of benefits to be captured from works completed in 2013/14.

It is assumed that bores rehabilitated have the same economic life as a new bore, which is estimated at 50
years. Similarly it is assumed that pipes installed have an economic life of 50 years. As such, it is assumed
that benefits from any works undertaken will be realised for the full assessment period.

Any recorded water saving or impact provided by jurisdictions for this assessment is assumed to be directly
attributable to GABSI and not as a result of any other initiative. Similarly, it is assumed that the full benefits
of GABSI are captured in available data, even if some are offset by other water use decisions – e.g.
additional allocation to natural gas from coal seams.

The benefits are assumed to be homogenous within jurisdictions. In reality, the benefits associated with
GABSI vary spatially, depending on the location of the works, the extent of groundwater dependent
ecosystems, and the proximity and connectivity to other bores and spring. However, most of the
information for this assessment has been provided at the jurisdiction level and therefore, for the purpose of
this assessment, it has been assumed that the benefits within a jurisdiction are consistent. This means that
a ML saved, or pressure restored within a given jurisdiction has the same benefit irrespective of where
these impacts occur.
3.3
Data and information sources
The TEV framework is based on existing information and data publicly available or provided by the funding
parties of the GABSI program (Commonwealth, Queensland, NSW, and SA governments). Where insufficient
information is available to quantity the benefits, the assessment discusses the metrics which could be applied if
better information was to become available. Where possible, qualitative metrics are considered and assessed.
3.4
Limitations
Limitations to the value for money assessment include:

Timing of artesian equilibrium is unknown. For example, pressure recovered in GABSI 1 may only be
apparent in future years. Given that the scope of this analysis did not include modelling of pressure
impacts, benefits associated with pressure recovery captured in the TEV assessment are limited to those
that have been identified (or witnessed) between 1999 and 2013. In essence the VfM review is a snapshot
in time and does not account for declining benefits had GABSI not proceeded, nor does it account for a
potential increase in benefits. It may be reasonable to conclude that the review will estimate VfM at a lower
level by not considering these non-linear trends in benefits.

The impacts that GABSI and the extraction of associated water during natural gas production from coal
seam tenures have had on one another have not been assessed.

The value of groundwater is not fixed and is driven by a range of factors which can change over time.
factors have not been considered included include:
-
Scarcity – during period of high scarcity such as droughts, the value of water significantly
increases.
-
Substitutability – for example, in areas where groundwater users also have access to surface
water or desalinated water (for example in coastal areas), the marginal value of groundwater will
be bounded by the cost of accessing the alternative water source and may be lower than in areas
with no alternative water source.
-
Quality – the quality of the water will determine potential end uses. In areas where only
groundwater is available, agricultural use is predominantly limited to grazing (pastoral use) due to
the quality of the water. Where shandying of groundwater with better quality water is possible, it is
more likely that the water can be used for irrigation purposes. Better quality water provides water
users with more flexibility to allocate that water to highest value uses.).
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GABSI Value for Money Review
There is insufficient information available to consider how these factors may differ within and between
jurisdiction and over time, and as such, they have not been captured in the analysis. The value of GABSI is
therefore assumed to be fixed and homogeneous across jurisdictions.

The water savings and pressure recovery achieved from each GABSI phase is assumed to be fixed for the
duration of the assessment period. This is a simplistic assumption given that as pressure is restored, flow
rates will increase in uncontrolled bores and springs. This will offset some of the water savings and
pressure recovery benefits estimated. In reality, this means that:
-
Works undertaken in Phase 2 help preserve the benefits achieved in Phase 1 and works undertaken
in Phase 3 help preserve benefits achieved in Phase 2 and 3
-
If works in following phases are not undertaken, benefits from preceding phases will be lower than
estimated.
Given that there is no data to establish a relationship between program phases, the analysis assumes that
works and benefits within a given phase are independent from works and benefits in other phases.
As there is varying quality and completeness of data to inform the quantification of the benefits, the sensitivity of
the value for money assessment to key assumptions has been tested (refer to a Section 5 for the sensitivity
assessment).
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GABSI Value for Money Review
4.
Measuring the benefits of GABSI
4.1
Consumptive benefits
Consumptive benefits have been defined as those realised through direct consumption of the GAB water. These
relate to benefits from: (a) reallocating savings for consumptive purposes; and (b) pressure improvements for
water users.
4.1.1
Consumptive benefits from reallocated water
Methodology
Based on current GABSI implementation plans prepared by each jurisdiction, a minimum of 70% of any water
saved from Queensland and NSW, and 50% from South Australia must be directly returned to the GAB to
restore pressure. The remaining 30-50% can be reallocated for consumptive purposes across any end use
sector, including:

Irrigated agriculture

Drinking water for livestock

Mining and related industries

Other industries

Water supply (treatment plants)

Households (direct)
Although less than 30% of saved water has been reallocated for consumptive use by Queensland and NSW,
and less than 50% has been reallocated by South Australia, the option of allocating that water still exists. As
such, the volume of water that can be re-allocated is valued based on its potential consumptive use value.
The consumptive value of the reallocated water can be estimated using a range of methods, including those
outlined in the following table.
Table 6: Potential valuation approached valuing saved water that can be reallocated for consumptive use
Method
Description
Applicability of method
Deprival
method
Under this method,
the value of water is
assumed to equal
the cost of
accessing the same
volume of water
from the next
cheapest alternative
water source (MJA,
2012).
Studies by Deloitte Access Economics – Economic Value of Groundwater for
Australia (2013), Marsden Jacob Associates (2012) and a Victorian study by RMCG
(2008) provide estimates of the value of water ($/ML) for different sectors using the
deprival method. A summary of these values is provided in 0).
The deprival values listed in 0 are not considered to be the most appropriate for
estimating the direct use of groundwater saved under GABSI. These values were
used to estimate the value of existing groundwater use, nationally or within a
jurisdiction4 and are most accurate for assessing the benefits associated with
maintaining existing groundwater availability for each sector. These values do not
necessarily represent the marginal value of additional water made available.
For example, despite the next cheapest alternative to access water being estimated
at $2,750 for the mining sector, there is no guarantee that a mining company
(existing or new) would be willing to pay that amount to access an additional ML of
water. The decision to purchase more water could depend on exogenous market
conditions such as end use price, input prices, global demand, and government
4
i.e. they estimate the cost (or opportunity cost) that would be incurred if 100% of the groundwater was no longer available to water
users (MJA, 2012)
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GABSI Value for Money Review
Method
Description
Applicability of method
policy.
Furthermore, water made available under GABSI is location specific, and accessing
this water would involve relocating the business or transferring water (e.g. piping). As
such, the costs of accessing the water and/or the operational flexibility to relocate
may impact the willingness to pay for additional water. This willingness to pay for a
new water licence may therefore not be as high as the value of existing groundwater
use.
Residual
value
method
Market
price
method
This method
assumes that the
value of water is
represented by the
profit generated by
the use of that
water.
The application of the residual method is generally deemed to be appropriate when
estimating the value of groundwater when it is not possible (or prohibitively costly) to
replace groundwater with an alternative water source. Deloitte Access Economics
(2013) suggested that this was most appropriate for the stock and domestic sector.
This is the value
revealed through
water trading
markets, where they
exist for
groundwater.
The best indicator for direct use value of additional groundwater delivered through
GABSI is water users’ willingness to pay for an additional ML of water.
Similarly to the deprival value, the residual value does not necessity capture the
demand and willingness to pay for additional water.
Where available, the market price of water can be used to reveal water users’
willingness to pay for an additional ML. In most markets, consumers at the margin
are willing to pay no more (and sellers willing to accept no less) than the actual price
in the market (Commonwealth Government, 2006). Accordingly, that price can
generally be taken as a measure of the use value.
Unlike the deprival method and residual value approach, the market price best
reflects the highest marginal value use at a point in time for the package of water
being sold, and reflects:

Physical or geographic constraints to accessing the water or trading the water

Regulatory barriers

Availability and/or cost of alternative water sources impacting demand.
Based on this assessment of the potential methods, SKM has used the market price method for valuing
reallocated water.
Groundwater entitlement trading is limited in most jurisdictions, so there is limited data on market prices that can
be applied to this study. The only data available includes:

Queensland data – only five trades between 2007/08 and 2012/13 for a total volume of 221 ML. The
range of these prices was $1,500/ML to $2,500/ML, with an average price of $2,281/ML (2013 dollars).5

NSW data – NSW has the highest volume of groundwater traded (Deloitte Access Economics 2013). Of
most relevance to this study is the auction conducted in 2009 to sell 24 groundwater access licences
(1,200ML), which were made available through GABSI water savings (noting that this groundwater had
restrictions on transferability and trading, which may have reduced the total pool of buyers). Prices for
auctioned licences ranged between $600/ML and $1000/ML, with an average price of $725/ML. The NSW
Office of Water public register also reports a single trade in the GAB Shallow Surat Groundwater Source of
243ML at $900/ML in April 2012. These ranges suggest that willingness to pay for additional water is
significantly lower than the values estimated in previous studies (0). The average auction result converts to
$804/ML in 2013 dollars.
Given that more water has been sold in NSW, the average price of $725/ML from the 2009 auction has been
used to estimate the direct use value of reallocated water across the three GABSI stages ($804/ML in
2013 dollars). The average market value from Queensland has been tested in the sensitivity analysis (Section
5
Data received from Frontier Economics (peer reviewers for the Review) via Queensland Department of Natural Resources and
Mines.
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GABSI Value for Money Review
5). Whilst the NSW market data is considered to be the most appropriate approach from the data available, the
following limitations should be noted:

Demand is location specific and there are risks applying a market value for parts of NSW to all of NSW and
other jurisdictions.

The average market price should be based on a larger sample of transactions over a longer period of time,
however this is not possible given the limited market data available. Where possible, improved market
information should be collected and assessed over time to determine whether the average price used
should be amended.

The majority of water purchased in the NSW auction was used to support tourism (60%-70%) and intensive
industries such as feedstock (Schalk et al, 2010). Mining is geographically inflexible, and therefore demand
from the mining sector will largely depend on the location of the access licence. Auctions in other locations
may therefore lead to higher prices if the mining sector has better access to the water. Pastoralists’
opposition to the NSW auction may have had some impact on demand from the sector6.

Buyers had little certainty about future water sales and this uncertainty would be reflected in their
willingness to pay. Increased certainty would impact the average market price and improved information to
potential buyers may also have led to increased trading activity (Schalk et al, 2010).
Metrics
The methodology and associated metrics applied to value the consumptive use of reallocated water are
presented in the following equation:
𝒚=𝟐𝟎𝟒𝟑
𝑪𝒐𝒏𝒔𝒖𝒎𝒑𝒕𝒊𝒗𝒆 𝒗𝒂𝒍𝒖𝒆 𝒇𝒓𝒐𝒎 𝒓𝒆𝒂𝒍𝒍𝒐𝒄𝒂𝒕𝒆𝒅 𝒘𝒂𝒕𝒆𝒓 = 𝑷𝑽( ∑ (𝑴𝑳 𝑺𝒂𝒗𝒆𝒅 × % 𝑴𝑳 𝒓𝒆𝒂𝒍𝒍𝒐𝒄𝒂𝒕𝒆𝒅 × 𝑾𝑻𝑷/𝑴𝑳)
𝒚=𝟏𝟗𝟗𝟗
A summary of the metrics used for each phase is provided in the following table.
Table 7: Data for consumptive value from reallocated water metrics
Metric
GABSI
description Phase 1
ML saved
(total)7
% ML
reallocated
91,767
34%
GABSI
Phase 2
GABSI
GABSI
Phase 3 (to Phase 3 (to
June 2013) June 2014)
74,984
30%
37,775
31%
Comment
56,186
Based on estimated ML saved from jurisdictional
implementation plans, and estimates provided by
the jurisdictions.
31%
Annual weighted average based on ML saved
within each jurisdiction and an allowance of up to
50% to be reallocated in SA and 30% in
Queensland and NSW.
Based on average NSW 2009 auction, escalated
to 2013.
WTP (2013
dollars) per
ML
6
7
$804
$804
$804
$804
This is equivalent to a one-off payment for water
reallocated ($/ML) which occurs mid-phase. For
example, the value of water reallocated in phase
1 is taken as the value of 91,767ML purchased at
$804 dollars in 2001/02.
Landowners opposed the NSW auctions and demonstrated on the day. The market price may therefore not represent the
willingness to pay by that sector.
Breakdown provided by jurisdiction in Table 5.
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GABSI Value for Money Review
Results
The total estimated direct benefit from the permissible reallocation of saved water is $52.6 million to June 2013
or $57.0 m to June 2014 ($ 2013, real). Table 8 and Figure 4 summarises the results for each jurisdiction across
the three phases of the program.
Table 8: Total direct use value from re-allocated saved water ($ 2013, real)
Jurisdiction
Phase 1
Phase 2
Phase 3 (to
June 2013)
Phase 3 (to
June 2014)
TOTAL to
June 2013
TOTAL to
June 2014
Qld
$ 11.74 m
$ 11.86 m
$ 5.16 m
$ 8.64 m
$ 28.76 m
$ 32.24 m
NSW
$ 6.29 m
$ 6.05 m
$ 3.33 m
$ 4.42 m
$ 15.67 m
$ 16.76 m
SA
$ 6.84 m
$ 0.30 m
$ 1.04 m
$ 1.33 m
$ 8.18 m
$ 8.47 m
$ 24.87 m
$ 18.21 m
$ 9.53 m
$ 14.39 m
$ 52.61 m
$ 57.46 m
TOTAL
Figure 4: Total direct use value from re-allocated saved water ($ 2013, real)
The value varies over the phases in line with the variation in water saved from works undertaken, given that all
other variables remain fixed. As such, Phase 1 and 2 delivered similar direct use value in both Queensland and
NSW, while in South Australia Phase 1 delivered much higher value than either other phase of the program.
4.1.2
Consumptive benefits from improved pressure
Method
A primary objective of GABSI is to recover GAB artesian pressure. Direct consumptive benefits associated with
pressure recovery predominantly relate to avoided capital and operational costs for water users, i.e.:

Avoided pump installation costs for landowners who would have needed to install pumps due to
declining pressure (flow rates) in the absence of the GABSI program.

Reduced or avoided pumping costs for landowners who face higher flow rates as a result of GABSI.
Each water user requires a certain flow rate for its operations, so if pressure in the GAB drops (i.e. in the
absence of GABSI), the artesian flow rates are reduced, and more energy is required to continue pumping
water at the required flow rate.
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GABSI Value for Money Review
To understand the incremental pressure impacts, it is necessary to compare the pressure across the GAB under
the following two scenarios:

Scenario 1 (Sc1): No GABSI Scenario. This is equivalent to the pressure in the GAB from 1999 onwards,
and assumes that no capping and piping activity in the GAB occurred from 1999/2000 onwards.

Scenario 2 (Sc2): With GABSI scenario. This scenario is based on actual pressure between 1999 and
2013 (with GABSI in place) and a projection of future pressure assuming all capping and piping activity
ceases in June 2014.
To estimate these impacts with a high degree of confidence, it is necessary to consider the variables outlined in
the following table.
Table 9: Method summary for quantifying consumptive benefit from pressure recovery
Variable
Recommended assessment method and limitations
Avoided pump installation costs (avoided number of pumps X average pump installation cost)
Avoided
number of
pumps
The following would be required to determine these variables:

Detailed stakeholder consultation to identify which bores already had pumps installed prior to 1999
and how many new pumps have been installed since 1999.

Detailed pressure modelling that considers change in pressure at specific bore locations.
(Avoided
pumps = #
pumps
required in
Sc1 - # pumps
required under
Sc2)

Calibration of pressure model with data obtained from stakeholder consultation to determine how
many bores would have needed new pumps installed under each scenario.

This modelling could then be used to determine the incremental change in the number of pumps
required under Sc1 and Sc2 (i.e. # pumps required in Sc1 - # pumps required under Sc2).
Average
pump
installation
costs
Pump installation costs include the cost of the equipment and the labour costs. It can be assumed that
other than stock and domestic water users, other water users in the GAB (such as town water use,
mining sector irrigation) require higher flow rates and therefore may already have pumps installed under
the base case scenario (Sc1).
Data for the number of pumps needed under each scenario is not available however, and pressure
modelling is not within the scope of this assessment. Therefore estimating the avoided number of
pumps resulting from the GABSI program has not been possible within the study constraints.
As such, the pump installation costs can be estimated using indicative estimates for stock and domestic
pumps – which are assumed to have a medium flow rate requirement of 2 L/s. Thus, the average pump
installation cost to meet this medium flow requirement is estimated to be $9,000 per pump (assuming a
range between $6,000 and $15,000 per pump).8
Cost of
gaining
access to
electricity at
the site
It is noted that the installation costs should also include the cost of gaining access to electricity for the
site. These costs vary significantly by location. For some stock and domestic users the cost of
connecting electricity to the site could exceed the cost of the pump installation costs. At some distances,
solar pumps may become more economically viable. Given these uncertainties costs cannot be
estimated within the constraints of this study.
Avoided pumping costs = average flow rate across the GAB X (energy use per m change in pressure head
(kW/m) x energy cost ($/kWh) X hours per year (8,790) x average change in pressure head (m))
8
The medium cost is based on the medium flow rate, which is not necessarily based on the median.
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GABSI Value for Money Review
Variable
Recommended assessment method and limitations
Average flow
rate across
the GAB
Estimated based on total water use in the GAB – 616,166 ML/annum (GABCC, 2000), and converted to
an annual flow rate (L/s).
Energy use
per metre lift
(kW/m)
Estimated based on:

Assumed flow rates for the different water use types in the GAB multiplied by the average water
use distribution across the GAB. Refer to Table 10 for the assumed breakdown in water use and
flow rates.

Average efficiency of pumps (assumed to be 47%), where total efficiency = 70% (pump) x 80%
(motor) x 85% (pipe system efficiency) = 0.479
Energy cost
Between $0.15 and $0.20 per kwh for commercial users. $0.20 per kwh has been used in the
assessment which is considered to be a conservative approach given that energy prices are expected
to increase above CPI over time.
Change in
pressure
head
This is equivalent to the average change in pressure head (lift) between Sc 2 and Sc 1. The average
change needs to be estimated per year across the assessment period (1999 to 2043). This cannot
currently be determined using the existing CSIRO pressure model (GABtran10) output used for the GAB
Water Resource Assessment (GABWRA).
Further, the GABtran model does not differentiate between flowing or capped bores. The model also
simulates pressure as a temperature corrected variable density, and so it is a complex task to derive a
pressure surface for the GAB from the model outputs. These issues would need to be resolved to
enable a suitable model for simulating changes in GABSI performance/benefits.
Metrics
The methodology and associated metrics applied to value the consumptive value associated with pressure
recovery are presented in the following equation:
𝑪𝒐𝒏𝒔𝒖𝒎𝒑𝒕𝒊𝒗𝒆 𝒗𝒂𝒍𝒖𝒆 𝒇𝒓𝒐𝒎 𝒓𝒆𝒔𝒕𝒐𝒓𝒆𝒅 𝒑𝒓𝒆𝒔𝒔𝒖𝒓𝒆
𝒚=𝟐𝟎𝟒𝟑
= 𝑷𝑽( ∑ ( 𝒂𝒗𝒐𝒊𝒅𝒆𝒅 𝒑𝒖𝒎𝒑 𝒊𝒏𝒔𝒕𝒂𝒍𝒍𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕 + 𝒂𝒗𝒐𝒊𝒅𝒆𝒅 𝒑𝒖𝒎𝒑𝒊𝒏𝒈 𝒄𝒐𝒔𝒕 )
𝒚=𝟏𝟗𝟗𝟗
Where
𝐀𝐯𝐨𝐢𝐝𝐞𝐝 𝐩𝐮𝐦𝐩 𝐢𝐧𝐬𝐭𝐚𝐥𝐥𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐬𝐭 𝐩𝐞𝐫 𝐚𝐧𝐧𝐮𝐦 = avoided number of new pumps × average pump cost
𝐀𝐯𝐨𝐢𝐝𝐞𝐝 𝐩𝐮𝐦𝐩𝐢𝐧𝐠 𝐜𝐨𝐬𝐭 𝐩𝐞𝐫 𝐚𝐧𝐧𝐮𝐦
L
= ∆ pressure head (m) × average flow rate across the GAB ( )
S
kw
$
× energy use per m change in pressure ( ) × 𝑒𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑠𝑡 (
) × ℎ𝑜𝑢𝑟𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
m
𝑘𝑊ℎ
= ∆ pressure head (m) × $/∆ pressure head
A summary of the metrics used for each phase is provided in the following table.
9
http://www.fao.org/docrep/010/ah810e/ah810e04.htm
10
GABtran is the only contemporary groundflow model covering the majority of the study area
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GABSI Value for Money Review
Table 10: Summary of metrics for consumptive benefit from pressure recovery
Metric
GABSI
Phase 1
GABSI
Phase 2
Avoided number
of pumps per
annum
Cannot be quantified
Average pump
cost (real 2013
dollars)
$9,000
Change in
pressure head
(average)
Flow rate (L/s)
$9,000
Unavailable Unavailable
616,166
616,166
GABSI
Phase 3 (to
June 2013)
GABSI
Phase 3 (to
June 2014)
Comment
As noted above, data is not available
for these metrics.
$9,000
Unavailable
616,166
$9,000
Unavailable
616,166
Based on the average installation rate
for S&D users.
This data is not available from existing
reports or modelling. Models used for
GABWRA do not provide a breakdown
in the information needed to assess the
change in pressure between these two
scenarios. Of particular value would be
data on the change in pressure head
resulting from GABSI in 2013,
compared with predicted pressure in
2013 without GABSI.
Estimated based on total annual water
use in the GAB – 616,166 ML (GABCC,
2000), and converted to a flow rate
(L/s).
Given that annual water use has been
considered the avoided pumping cost is
an avoided annual pumping cost.
Energy use per
metre lift (kW/m)
of total GAB
water
407.81
407.81
407.81
407.81
$/m change in
pressure head
$714,490
$714,490
$714,490
$714,490
Based on estimated average flow rate
of 19,538 l/s for a total water use of
616,166ML/year.
Based on $0.20/kwh and 8760 hours
per year.
This is an annual cost.
Results
As summarised in Table 11, there is insufficient information in existing reports and models to quantify the
avoided pump and pumping costs attributed to GABSI.
The GABWRA undertaken by CSIRO and others was reviewed for use in the VfM assessment. The data
contained in the report provided useful background to the consideration of changes in pressure, but did not
provide the required level of specificity to obtain the raw data needed for this analysis11. To estimate the
incremental change in pressure as a result of the GABSI program, relevant pressure maps illustrating changes
in pressure from around 1989 to 2012/13 are needed. The GABWRA report does not provide this data.
Furthermore, the scale used in the maps provided is too coarse to be used for detailed analysis.
Two types of pressure change data were provided in the report – one type was a series of maps showing pressure surfaces on
roughly 20 year intervals, and the other type was times series graphs of pressure changes for selected bores.
11
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Additional CSIRO groundwater data containing long term pressure observations in the GAB was also
considered as input to the VfM assessment. This showed mixed results: 12

The number of bores demonstrating an increase in pressure prior to GABSI is nearly equal to the number
showing pressure increases after GABSI implementation. This is presumably due to the capping and piping
that occurred immediately prior to implementation of the GABSI works.

A larger than expected number of bores demonstrated an ongoing pressure decline, even during the
GABSI implementation period.
These observations do not provide any conclusive evidence whether pressure in the GAB has or has not
changed as a result of GABSI. Importantly, the distribution of the bores with time series data did not necessarily
relate to areas where GABSI has been implemented.
Despite the lack of quantitative data from the GABWRA, there is some anecdotal and physical evidence of
pressure having increased in the GAB as a result of GABSI. Anecdotal evidence provided by the jurisdictions is
summarised in the following table.
Table 11: Available evidence of pressure recovery provided by the GAB jurisdictions
Jurisdiction
Data available or provided
Limitation of data
Qld
In Queensland, the establishment of a legislative
framework to manage extraction of water and the
significant investment in capping and piping
programs by landholders and government since
before GABSI has resulted in measurable
pressure recovery in key areas across the GAB.
Whist this data suggests that capping and piping
works have been successful in recovering
pressure, there is insufficient information to
separate the impacts from pre-GABSI and
different GABSI phases.
The combined result of these activities is that by
2005 there was an increase in pressure in half of
all artesian bores monitored – 341 having
increased by up to 8 m and 31 having increased
by more than this.
More recent data has not been made available
Around 90% of capped bores have either
stabilised or increased pressure during the period
of GABSI (340 bores).
This information is anecdotal and cannot be tested
or verified with existing models or reports.
Furthermore the impacts cannot be attributed to
the different GABSI phases.
NSW
~12 bores have started to reflow in the last year or
two. A non-linear increase is expected over the
next few years.
SA
Pressure recovery (10+kpa) observed at little
Blyth bore over 17 month period which can be
attributed to decommissioning of Big Blyth bore
(located 13km away)
Despite these limitations, this data suggests that
NSW considers GABSI to have been successful in
recovering pressure within its jurisdiction.
This information is based on bore monitoring and
is therefore robust. However, the results are only
for one bore and cannot be extrapolated across
the GAB or across GABSI phases.
Given the limitations of quantifying the direct consumptive benefits from pressure recovery, these impacts have
been considered further as part of a break-even assessment in Section 6.2. The break even assessment
provides more detail about the pressure recovery that is needed for the program benefits to at least equal the
costs.
12
Based on GABWRA data supplied by Brian Smerdon, CSIRO, November 2013
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GABSI Value for Money Review
4.2
Non-consumptive benefits
Non-consumptive benefits relate to improved recreational, tourism, heritage, and amenity. They also include
improved pest and weed control to private and public landowners.
4.2.1
Direct private landholder benefits
Method
The purpose of this assessment is to better understand the VfM for government investment, so assessing the
VfM of private landholder investment was agreed to be out of scope. Furthermore, it is generally assumed that
the benefit to landowners must at least equal their financial contribution to the GABSI program. This includes
up-front investment, both in dollars and in-kind and any ongoing maintenance costs. Participation in the
program is voluntary, so landholders must have some certainty in the direct benefits they will receive or they
would not participate.
The GABSI program involves bore rehabilitation and bore drain replacement on private property, leading to
direct benefits to the landowner 13 :

Improved utilisation of productive land (better reach and/or less evaporation)

Extended life of bores

Reduced on farm maintenance/monitoring costs (eg of cleaning drains)

Restoration of native vegetation

Improved water quality – relative to when it flows through open drains

Improved safety and health of stock during drought (stock weakened by drought are more likely to collapse
or bog in drains)

Reduced mustering time- stock traps can be installed at water points so that stock can self-muster

Improved (or lower cost of) local pest and weed control on private property

Improved pressure and clean water at homestead
Metrics
While metrics could be developed for the benefits listed above, landowner benefits have not been included in
the quantified economic value. If they were to be included, the benefit would be valued based on the
assumption that landowners’ financial contribution to the scheme must at least equal any associated direct
benefit.
The assumption that landholder costs equal landholders benefits is considered to be a conservative estimate
given that the scheme is voluntary and so landowners would not choose to participate in the program if they did
not consider that the benefits did not outweigh their financial contribution. For example, a study by the Centre of
International Economic (CIE 2003) surveyed 19 farms, and the average benefit cost ratio (BCR) for landowners
was 2.6 – meaning 2.6 dollars of benefit to one dollar of private expenditure. Another survey undertaken by
NSW Office of Water (Hill et al 2010) of nine NSW landholders estimated benefit cost ratios to landholders
ranging from 0.4 to 7.2, suggesting that on average, landholders receive benefits that exceed the costs.
If direct landowners are to be captured, in the TEV of the program, the following equation could be applied:
𝒚=𝟐𝟎𝟒𝟑
𝑵𝒐𝒏 𝒄𝒐𝒏𝒔𝒖𝒎𝒑𝒕𝒊𝒗𝒆 𝒍𝒂𝒏𝒅𝒐𝒘𝒏𝒆𝒓 𝒃𝒆𝒏𝒆𝒇𝒊𝒕𝒔 = 𝑷𝑽( ∑ ( 𝒍𝒂𝒏𝒅𝒐𝒘𝒏𝒆𝒓 𝒄𝒐𝒏𝒕𝒓𝒐𝒃𝒖𝒕𝒊𝒐𝒏($) × 𝐵𝐶𝑅 𝐹𝑎𝑐𝑡𝑜𝑟
𝒚=𝟏𝟗𝟗𝟗
13
Note: these include consumptive and non-consumptive benefits, but have been considered as a group.
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GABSI Value for Money Review
A summary of the metrics used for each phase is provided in the following table 14.
Table 12: Landowner contributions
Metric description
$ landowner
contribution (TOTAL
- $2013 real)
GABSI
Phase 1
GABSI
Phase 2
GABSI Phase 3
(to June 2013)
GABSI Phase 3
(to June 2014)
$36.13
$45.36
$31.70
$16.64
Qld
$ 12.73 m
$ 16.94 m
$ 10.44 m
$ 16.64 m
NSW
$ 22.20 m
$ 28.42 m
$ 21.26 m
Not available-
$ 1.20
-
-
-
SA
Landowner Benefit
Cost Ratio (BCR)
Factor
1
1
1
1
Comment
Based on estimated
contributions provided by each
jurisdiction.
As the most conservative
assumption, it can be assumed
that the value equals the
financial contribution.
Results
The landowner benefits and costs have not been included in the TEV. A sample of landholder views obtained
through a study conducted by the Centre for International Economics and Resource Policy and Management
(2003) are provided below.
Case study 1: Warrego (QLD) landholder view 15
Case study 2: Surat (NSW) landholder view16

“The owner believes that the GAB as a whole is facing
declining bore pressures and is ‘in trouble’ but is now
being managed in a responsible manner provided the
current government approach continues.


Key problems, he thinks, are too many uncontrolled
bores and the huge wastage of water in bore drains.
Concentrating on increasing or at least maintain bore
pressures is the key focus.
“The owner believes that bore pressures across the
Basin are decreasing somewhat but that in general it is
now being managed responsibly. But there is still a
long way to go and uncapped bores constitute a
serious problem.

Wastage of water, decreasing bore pressures and
uncontrolled bores are key problems facing the GAB.

In addressing the problem attention should concentrate
on those areas where bore pressures are lowest.

The current subsidy scheme is about right — probably
on the generous side.

A real problem with bore trust is that some people find
it financially difficult to participate, hold up the project
for all the others.”

There is an even mix of public and private benefits from
capping and piping.

He believes those who have not piped would be most
influenced by seeing for themselves the advantages of
capping and piping, and the threat of lower government
subsidies or regulations.”
4.2.2
Tourism, recreation and amenity benefits
Method
ACIL Tasman (1999) conducted an economic and social assessment of the GAB in Queensland, and looked at
the contribution of the two regions considered to reflect the GAB – Darling Downs and Outback. Tourism
contributed a total of $294m to the Gross Regional Product of the two regions. However this is expected to
14
This is based on data provided by the jurisdictions. Some of the data is incomplete.
15
Centre for International Economics and Resource Policy and Management (2003).
16
Centre for International Economics and Resource Policy and Management (2003).
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overestimate the benefits of the GAB as many activities are independent of the GAB resource, and it is unlikely
that GABSI could be attributed to preserving/maintaining all of the activities that do depend on the GAB.
Another approach to determining the tourism and recreation benefits of GABSI would be to consider the value
placed on tourism and recreation ($ / household, $ / visitor) and extrapolate this across visitor numbers at each
of the key tourism and recreation sites that are known to depend on the GAB. Rolfe (2008) used this approach
to determine an average recreational consumer surplus of $139.41/day ($154.90/day in 2013 dollars), which
could be transferred to recreation use in the GAB. He also looked at the value of the Dalhousie Springs complex
in Witjira National Park ($2.79 million based on 10,000 visitors per annum staying two nights) and applied a
21% reduction in annual extraction achieved by GABSI as a proxy for estimating marginal effects. This resulted
in annual recreation benefits estimated at $585,222 or $4.05/ML of reduced water extraction. 17
A list of the key regions and specific tourism and recreations sites partly supported by the GAB is provided in
Table 13.
Table 13: Key tourism and recreation sites supported by the GAB18
Jurisdiction Relevant regions and tourism data
NSW
QLD



17
18
19
20
Key tourism and recreation sites

Moree, various locations - a number of accommodation houses
that have access to private artesian spas.

Bourke, Comeroo Camel Station - multi-faceted tourist retreat
with camel riding, private artesian spas, and a working sheep
station.

Pilliga Bore Baths

Burren Junction Bore Baths – also has accommodation and
facilities.

Lightning Ridge Bore Baths – has several accommodation
houses and Bore Baths.
Outback – total tourism
expenditure of $299m (basic
prices)

Blackall Aquatic Centre - aquatic centre with artesian spa.

Mitchell Great Artesian Spa Complex - Mitchell's major tourist
attraction.
Darling Downs – total tourism
expenditure of $429m (basic
prices)

Cunnamulla, Charlotte Plains Farmstay - a working sheep and
cattle property with bore baths.

Ilfracombe Artesian Spa

Bedourie Artesian Spa – 22 person Therapeutic Spa and
provides for an aquatic centre (built in 2000)

Cunnamulla Fella Centre – Artesian Time Tunnel, Paroo Shire
Council, Eromanga Basin
Outback NSW – 320,700
overnight visitors in 2012/1319;
total tourism expenditure of
$175m (basic prices)20
Figures quoted directly from Rolfe (2008) have not been escalated to 2013 dollars.
Total tourism expenditure is obtained from DRET (2011), and is based on 2007/08 data. Basic price is defined as “The amount
receivable by the producer from the purchaser for a unit of a good or service produced as output, minus any tax payable plus any
subsidy receivable, on that unit as a consequence of its production or sale. It excludes any transport charges invoiced separately
by the producer.”
Tourism NSW
‘Basic price’ refers to the amount receivable by the producer from the purchaser, minus tax and plus subsidy. Transport charges
are excluded.
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GABSI Value for Money Review
Jurisdiction Relevant regions and tourism data

SA
Outback and Flinders Range –
570,000 visits over June 201012, with an average stay length
of stay of 4.3 nights21; total
tourism expenditure of $48m
(basic prices) for the Outback
region only
Key tourism and recreation sites

Wabma Kadarbu Mound Springs Conservation Park – Blanche
Cup and The Bubbler mound springs

Witjira National Park – Dalhousie Springs

Vulkathunha-Gammon Ranges National Park – Mount
McKinlay Spring
Metrics
A potential metric to measure the tourism / recreational benefits of GABSI is provided below. This metric would
need to be applied to each of the key tourism and recreation sites listed above. Importantly, the number of
visitors captured in the assessment (and/or the length of stay) must reflect the additional visitor numbers (or
duration) that can be directly attributed to GABSI. In other words, only the additional recreation or tourism
benefits that are a result of improved spring flows should be captured. The proxy of 21% applied by Rolfe
(2008) to estimate the marginal recreation/tourism value produced by GABSI would need to be further tested
before it is used as part of a value for money assessment.
𝑻𝒐𝒖𝒓𝒊𝒔𝒎 & 𝑟𝑒𝑐𝑟𝑒𝑎𝑡𝑖𝑜𝑛 𝑏𝑒𝑛𝑒𝑓𝑖𝑡
𝒚=𝟐𝟎𝟒𝟑
= 𝑃𝑉( ∑ (𝒊𝒏𝒄𝒓𝒆𝒎𝒆𝒏𝒕𝒂𝒍 𝒂𝒏𝒏𝒖𝒂𝒍 𝒗𝒊𝒔𝒊𝒕𝒐𝒓𝒔 (#) × 𝒍𝒆𝒏𝒈𝒕𝒉 𝒐𝒇 𝒔𝒕𝒂𝒚 (𝒅𝒂𝒚𝒔)
𝒚=𝟏𝟗𝟗𝟗
× 𝒄𝒐𝒏𝒔𝒖𝒎𝒆𝒓 𝒔𝒖𝒓𝒑𝒍𝒖𝒔 ($/𝒅𝒂𝒚)
Results
A value for recreational or tourism benefits could not be quantified based on existing data. In particular, data on
the visitor numbers and average length of stay at each of the key tourism and recreation sites listed above
would be required. This data would also need to identify the increase in visitor numbers or length of stay at each
site as a result of GABSI. The information currently available does not provide that required level of detail for
this type of analysis. However, based on the previous study of the Dalhousie Springs complex (recreation
benefits of $0.6m/annum) there are likely to be some relatively minor but tangible recreation benefits associated
with the GABSI program.
4.2.3
Heritage benefits
Methodology
Heritage value attributed to the GABSI program cannot be quantified because: 1) the GAB area has not been
systematically surveyed or assessed for cultural heritage significance; and 2) surveys to determine the
importance of cultural heritage sites in the GAB to Indigenous and non-Indigenous communities have not been
undertaken. Furthermore, some information is culturally sensitive and thus not widely available. Thus, metrics
have not been developed for this part of the TEV framework.
Results
Although these benefits cannot be quantified, there is significant evidence of Indigenous occupation and use
recorded within GAB spring wetlands. Cultural heritage artefacts including scarred trees, rock art, burials,
pathways, stone artefacts and scatters, wells, grinding grooves, etc. have all been found at sites and spring
wetlands throughout the GAB.
21
South Australian Tourism Commission (2012)
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In Queensland, for example, 150 Indigenous cultural heritage sites have been recorded in relation to GAB
spring wetlands, however this is expected to be a lower estimate of the total number of sites. In NSW,
significance to Aboriginal people has not been researched for the springs, but Peery Lake has been designated
a place of major cultural significance for Aboriginal people of the Barkindji. South Australia has also undertaken
studies finding Indigenous cultural heritage sites in the GAB region, but these records are not available to the
public.
4.3
Indirect value
4.3.1
Indirect benefits to rural communities
Method
The flow-on effects of the direct consumptive benefit to the rest of the economy have been estimated using
multipliers estimated by Deloitte Access Economics (2013). These multipliers reflect the degree to which the
economic activity by water users impacts demand for inputs in other sectors.
The multipliers estimated are presented in ratio figures, which represent the ratio between total direct value and
total value. A ratio of 2 therefore suggests that every dollar of direct value results in an additional value of $1 of
value add elsewhere in the economy, with a total economic value of $2. These ratios (as well as multipliers
between direct and indirect value) are provided in the following table.
Table 14: Summary of available indirect benefit multipliers (Deloitte Access Economics, 2013)
Ratio of direct to
total value
Multiplier – direct
to indirect value
Agriculture - Irrigation
2.00
1.00
Agriculture- drinking water for livestock
2.08
1.08
Mining
1.45
0.45
Urban Water supply
1.89
0.89
Households
NA
NA
Manufacturing and other industries
2.00
1.00
Sector
The average multiplier across sectors was used in the assessment. This is an indicative estimate only; as the
multiplier could be higher or lower depending on how the water is reallocated (i.e. to which sector). This is
discussed in more detail in Table 15.
The average multiplier is applied to the direct use value quantified in the assessment, which is the direct use
value from reallocation of saved water.
Metrics
The methodology and associated metrics applied to value the consumptive use of reallocated water are
presented in the following equation:
𝒚=𝟐𝟎𝟒𝟑
𝑰𝒏𝒅𝒊𝒓𝒆𝒄𝒕 𝒃𝒆𝒏𝒆𝒇𝒊𝒕𝒔 = 𝑷𝑽( ∑ ( 𝒂𝒏𝒏𝒖𝒂𝒍 𝒅𝒊𝒓𝒆𝒄𝒕 𝒃𝒆𝒏𝒆𝒇𝒊𝒕 × 𝒂𝒗𝒆𝒓𝒂𝒈𝒆 𝒎𝒖𝒍𝒕𝒊𝒑𝒍𝒊𝒆𝒓)
𝒚=𝟏𝟗𝟗𝟗
A summary of the metrics used for each phase is provided in the following table.
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GABSI Value for Money Review
Table 15: Metrics for indirect benefit valuation
Metric
description
Multiplier
(direct to
indirect
value)
GABSI
Phase 1
GABSI
Phase 2
0.88
0.88
GABSI
GABSI
Comment
Phase 3 (to Phase 3 (to
June 2013) June 2014)
0.88
0.88
Based on average multiplier across the water
use sectors.
This is an indicative estimate only; as the
multiplier could be higher or lower depending on
how the water is reallocated.
For example, the multiplier would be 1.0 if a
weighted average of the multipliers in Table 14 is
used (based on the water use profile in the
GAB). Similarly, the multiplier would be 1.0 if it is
assumed that the industries purchasing water will
be the same as those that participated in the
NSW auction (tourism and feedlot).
Given that the allocation of new water between
sectors is unknown, a basic average of the
multipliers was considered to be most
appropriate.
Direct value
($ 2013)
$ 24.87 m
$ 18.21 m
$ 9.53 m
$ 14.39 m
Based on the only direct value fully quantified in
the assessment – direct consumptive benefit
from reallocation of saved water.
Results
The total estimated indirect benefit across GABSI is $46.51m (to June 2013) or $50.81m to June 2014. A
breakdown of results by jurisdiction is provided in Table 16 and Figure 5.
Table 16: Total indirect value ($ 2013, real)
Jurisdiction
Phase 1
Phase 2
Phase 3 (to
June 2013)
Phase 3 (to
June 2014)
TOTAL to
June 2013
TOTAL to
June 2014
Qld
$ 10.38 m
$ 10.49 m
$ 4.56 m
$ 7.64 m
$ 25.42 m
$ 28.50 m
NSW
$ 5.56 m
$ 5.35 m
$ 2.94 m
$ 3.91 m
$ 13.86 m
$ 14.82 m
SA
$ 6.05 m
$ 0.26 m
$ 0.92 m
$ 1.17 m
$ 7.23 m
$ 7.48 m
TOTAL
$ 21.99 m
$ 16.10 m
$ 8.42 m
$ 12.72 m
$ 46.51 m
$ 50.81 m
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GABSI Value for Money Review
Figure 5: Total indirect value ($ 2013, real)
4.4
Option value, bequest / altruism, and stewardship values
Method
Option and bequest values relate to:

Option value: future direct and indirect use values. Valuing the direct use benefit of returned water to
the GAB does not capture the value to those who anticipate using the GAB water or visiting the springs
sometime in the future. There are economic arguments that non-visitors would be willing to pay to preserve
the option of visiting (Boardman et al 1996)22. This ‘option value’ is a separate benefit category that is
based on the opportunity of future use of the resource.

Bequest value: value of the use of the GAB by others. Value of having the option for others to benefit
from the use the GAB in the future.

Stewardship value: value of preserving the GAB for others. Willingness to pay for the existence of the
GAB motivated by a sense of stewardship, where there is no actual or planned use for themselves or
others. This relates to the intrinsic value people hold for the assets.
Studies have not been undertaken to assess these values within the GAB, therefore metrics for qualitative or
quantitative assessment have not been considered. The only way to assess these values in more detail is
through willingness to pay studies, and more specifically, through stated preference techniques.
Stated preference techniques use surveys to ask people how much they are willing to pay for a given benefit or
service. Contingent valuation and choice modelling are two survey types used for these purposes. However
questions are often framed as the willingness to pay for the protection or enhancement of environmental values
meaning that it is difficult to separately measure the willingness to pay for use and non-use values. Using these
studies to solely estimate option or bequest values can lead to double counting of benefits (refer to Table 17 for
more detail on these methods).
22
CBA concepts and practice text book
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Results
While metrics cannot be developed to quantify these values, there is anecdotal evidence supporting the
concepts underlying such value.
For example, the conservation group, Bush Heritage Australia, purchased Edgbaston Reserve (this property
includes a group of natural springs which is in close proximity to a number of bores that were recapped under
the GABSI program) in Queensland in 2008 to conserve the natural springs and ecosystems that they support.
They now conduct ongoing works on the reserve to control pests and weeds and restore the wetlands to
conserve a number of endemic species including two threatened fish species. Much of the funding for this group
is provided by private donations for long term stewardship purposes.
4.5
Environmental benefits
4.5.1
Conserving biodiversity
Method
Valuation of environmental benefits attributable to the GABSI program must consider the change in
environmental condition (i.e. groundwater ecosystem service condition) that is due to increases spring flows
from pressure recovery achieved.
The range of possible methods to assign monetary values to ecosystem services is described in the following
table.
Table 17: Methods to value environmental benefits
Method
Description
Applicability of method
Direct market
valuation
approaches
This approach can be based on a prices
revealed through a functioning market for
ecosystem service, where such a market
exists.
This method is limited in the case of GABSI as
there is no clear direct market for the
environmental benefits (i.e. protection of
biodiversity, conservation of threatened flora and
fauna, etc).
Alternatively, market valuation can be based
on the cost which would be incurred if the
environmental benefit no longer existed and
had to be recreated or the contribution of the
environmental benefit to a traded commodity.
Revealed
preference
approaches
This approach draws indirectly on markets or
on household behaviour, such as expenditure
or travel behaviour, to infer individual
preferences from behaviour (Commonwealth
Government 2006).23
This approach could therefore include the
travel cost method which infers value from a
change in travel expenditure or hedonic
pricing which attributes value of say an
environmental asset to house prices.
23
This method requires a large quantity and high
quality of relevant data to appropriately assess the
relationship between the environmental benefit and
indirect market.
It is not enough that studies assess the value of all
groundwater ecosystems in the GAB.
Questionnaires must be designed to assess the
additional ecosystem service value that is
attributable to GABSI.
This data is not available for GABSI.
http://www.finance.gov.au/publications/finance-circulars/2006/docs/Handbook_of_CB_analysis.pdf
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Method
Description
Applicability of method
Stated preference
approaches
This approach involves conducting surveys to
ask respondents what they would be willing to
pay for a public good – in this case a
groundwater ecosystem system.
There are stated preference surveys which have
been undertaken that are relevant to GABSI,
however there scope tends to focus on very
specific areas of the GAB and it is therefore difficult
to transfer these benefits to the whole of the GAB
based on existing information. Furthermore, the
hypothetical aspect of the market limits its
robustness as an appropriate measure.
There has been no systematic monitoring of spring flows and groundwater ecosystems to understand how the
conditions have changed over time, or as a result of GABSI. However, there have been a number of studies
aimed at valuing environmental assets more broadly.
Relevant studies identified by Rolfe (2008) include:

Choice modelling survey of the Desert Uplands region (which overlaps part of the GAB in Queensland)
conducted by Rolfe et al (2000) and Blamey et al (2000). Responses were gathered from a random sample
of Brisbane households in 1997 with results suggesting that: (a) the annual value of avoiding the loss of
each 1% of unique ecosystems was $4.79 per household (2007 dollars) per Brisbane household for 15
years, and (b) the annual value of avoiding the loss of an endangered species was $14.83 per household
(2007 dollars).

Choice modelling survey for the Macquarie Marshes and Gywdir Wetlands in inland NSW by Morrison et al.
(2002) found that Sydney households valued improved areas of wetlands at $0.04 and $0.05 per hectare,
and improved frequency of waterbird breeding at $12.85 and $31.63, and protection per endangered
species at $5.59.

Choice modelling survey of the Upper South East region of South Australia by Macdonald and Morrison
(2005) found that South Australian households placed a protection value of $717/ha for scrublands,
$1,019/ha for grassy woodlands, and $1,543/ha for wetlands.
It may be possible to transfer some of these values to estimate the environmental benefits of GABSI, in
particular loss of unique ecosystems, loss of threatened species, and protection of wetlands for example.
However, there is limited data available to conduct this assessment. While there is a known relationship
between GAB pressure, spring flow, and endemic fauna and flora, it is difficult to establish a direct relationship
between GABSI and improvement in wetland existence or health.
Some of the challenges in measuring environmental benefits of GABSI include the following:

Although there are examples of endemic species which have become extinct as a result of draw-down
(Fensham 2010), there is no data that links the rate of extinction to draw-down, which is needed to
estimate the avoided loss associated with works under each GABSI phase.

Lack of sufficient data to separate impacts directly attributable to the GABSI from other initiatives aimed at
recovering native species.

Although a comparison of wetted surface extents of springs undertaken between 2008 and 2011
(Queensland Government 2012) indicated a potential change of over 200% in Edgbaston and Spring Rock
springs complexes, determining the cause was not possible. Additional data is needed to determine the
aquifer head pressure associated with each spring complex. Further data is then required to determine
whether the increase in spring extents is a result of artesian pressure or consistent wet years since 2008.

There are unintended consequences of the GABSI which also need to be considered. For example, while
the isolated nature of many GAB springs has enabled the evolution of endemic species, they are likely to
become more reliant on natural artesian spring wetlands as the number of bore drains are reduced due to
bore capping and piping.
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Metrics
Based on the most relevant studies identified above, some potential metrics that could be applied to assist in
measuring the environmental benefits of GABSI are provided below.
𝑩𝒊𝒐𝒅𝒊𝒗𝒆𝒓𝒔𝒊𝒕𝒚 𝒑𝒓𝒐𝒕𝒆𝒄𝒕𝒊𝒐𝒏
𝒚=𝟐𝟎𝟒𝟑
= 𝑷𝑽( ∑ 𝐚𝐯𝐨𝐢𝐝𝐞𝐝 𝐥𝐨𝐬𝐬 𝐨𝐟 𝐮𝐧𝐢𝐪𝐮𝐞 𝐞𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦 (%)
𝒚=𝟏𝟗𝟗𝟗
× 𝐖𝐓𝐏 𝐟𝐨𝐫 𝐚𝐯𝐨𝐢𝐝𝐞𝐝 𝐥𝐨𝐬𝐬 ($ 𝐩𝐞𝐫 𝐡𝐨𝐮𝐬𝐞𝐡𝐨𝐥𝐝) × 𝒉𝒐𝒖𝒔𝒆𝒉𝒐𝒍𝒅𝒔
A summary of the metrics available and unviable for estimating biodiversity benefits from GABSI are
summarised below.
𝑩𝒊𝒐𝒅𝒊𝒗𝒆𝒓𝒔𝒊𝒕𝒚 𝒑𝒓𝒐𝒕𝒆𝒄𝒕𝒊𝒐𝒏
𝒚=𝟐𝟎𝟒𝟑
= 𝑷𝑽( ∑ 𝐚𝐯𝐞𝐫𝐭𝐞𝐝 𝐥𝐨𝐬𝐬 𝐨𝐟 𝟏 𝐞𝐧𝐝𝐚𝐧𝐠𝐞𝐫𝐞𝐝 𝐬𝐩𝐞𝐜𝐢𝐞𝐬 (#)
𝒚=𝟏𝟗𝟗𝟗
× 𝐖𝐓𝐏 𝐟𝐨𝐫 𝐚𝐯𝐨𝐢𝐝𝐞𝐝 𝐥𝐨𝐬𝐬 ($ 𝐩𝐞𝐫 𝐡𝐨𝐮𝐬𝐞𝐡𝐨𝐥𝐝) × 𝒉𝒐𝒖𝒔𝒆𝒉𝒐𝒍𝒅𝒔
Table 18: Summary of metrics for consumptive benefit from pressure recovery
Metric
Avoided loss of
unique ecosystem
(%)
GABSI
Phase 1
GABSI
Phase 2
GABSI
Phase 3
(to June
2013)
GABSI
Phase 3
(to June
2014)
As noted above there has been no systematics
monitoring of spring flows and groundwater
ecosystems to understand how the conditions
have changed over time, or as a result of GABSI.
Not available
Avoided loss of
endangered
species (#)
Willingness to Pay
(WTP) for avoided
loss (or protection)
of unique
ecosystems per
household
Willingness to Pay
(WTP) for avoided
loss (or protection)
of endangered
species
$5.65
$17.48
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$5.65
$17.48
Comment
$5.65
$17.48
$5.65
$17.48
This annual value is based on Rolfe et al (2000)
and Blamey et al (2000) and is for a period of 15
years. The value has been escalated to 2013
dollars.
This annual value is based on Rolfe et al (2000)
and Blamey et al (2000) and is for a period of 15
years. The value has been escalated to 2013
dollars.
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GABSI Value for Money Review
Metric
GABSI
Phase 1
GABSI
Phase 2
GABSI
Phase 3
(to June
2013)
GABSI
Phase 3
(to June
2014)
Comment
Where possible, the number of households
should vary year on year with the population. For
the sake of simplicity, 2013 household numbers
have been applied.
Number of
households
Approx. 5.5 million
It is assumed that all households in the GAB
jurisdiction - including Queensland, NSW and
South Australia will value the groundwater
ecosystems. This may be higher if non-GAB
jurisdictions are willing to pay for ecosystem
preservation in the GAB or lower, if not all
households are willing to pay – e.g. Rolfe (2008)
reduced the households by 50% to reflect the
response rate to the survey.
Sensitivity tests should always be run on the
number of households (to allow for less and more
households).
Results
The metrics needed to quantify the avoided loss of ecosystems (unique or endangered) as a result of GABSI is
unavailable and therefore the biodiversity benefits from the GABSI program could not be captured in the TEV
assessment.
As data was unavailable to appropriately apply the above metrics (e.g. clear evidence demonstrating that
GABSI averted the loss of an endangered species), available evidence to demonstrate the qualitative value of
the groundwater ecosystem services is considered instead.
There are significant legislative obligations on both the Commonwealth and jurisdictions to protect the
environmental value provided by the GAB. These Acts suggest government (and therefore public) willingness to
protect these assets and therefore implies an intrinsic public value. Relevant legislation includes:

Commonwealth – EPBC Act 1999

NSW – Threatened Species Conservation Act 1995, National Parks and Wildlife Act 1974, Environmental
Planning and Assessment Act 1979

QLD – Vegetation Management Act 1999, Nature Conservation Act 1992, Environment Protection Act
1994

SA – Natural Resources Management Act 2004, Native Vegetation Act 1991

International – IUCN Red List, Ramsar Convention
The GAB once sustained approximately 500 complexes of permanent springs (Fairfax et al 2007)24, which can
vary in size from miniscule to over 100ha. The largest discharge spring is located at Dalhousie Springs in South
Australia. Active spring wetlands, occurring from the southern end of Cape York Peninsula to Lake Eyre in
South Australia, are sustained by a constraint supply of water from the GAB and therefore are not exposed to
seasonal drying like most other wetlands. This difference to seasonal wetlands means that spring wetlands
support distinct ecosystem services (Fensham et al 2010).
24
It is noted that the definition of spring complexes is not consistent across jurisdictions.
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GABSI Value for Money Review
A recovery plan for the community of native species dependent on natural discharge of groundwater from the
GAB (Fensham et al 2010) identified aquifer drawdown as a key threat to the native species of the GAB,
suggesting that 40% of discharge spring complexes have become inactive during the period of settlement, and
another 14% were categorised as active and inactive. Whilst these findings were based on limited data25, the
analysis concluded that aquifer drawdown is linked to spring extinction and decline, and to loss of endemic
species. Figure 6 provides an overview of the location of major springs groups in the GAB and their
conservation status in relation to the EPBC Act 1999.
25
For some complexes in SA and NSW, data was not available, and these were excluded from the analysis.
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GABSI Value for Money Review
Table 19 provides a list of key communities of native species found in the GAB and their conservation status
according to Commonwealth and State legislation.
Figure 6: GAB spring complexes and their status under the EPBC Act 1999 (CSIRO, 2012, p.6)
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GABSI Value for Money Review
Table 19: Conservation status of the community of native species dependent on natural discharge of groundwater from the
GAB under Australia and State Government legislation26
Name
Conservation status
Known locations
Critically endangered
nationally
Boggomoss
Elizabeth Springs
Endangered nationally
and in QLD
Elizabeth Springs
Chlamydogobius squamigenus
Vulnerable nationally,
endangered in QLD
Edgbaston / Myross
Endangered nationally
and in QLD
Edgbaston / Myross
Animals
Adclarkia dawsonensis
Boggomoss Snail, Dawson Valley Snail
Edgbaston Goby
Scaturiginichthys vermeilipinnis
Red-finned Blue-eye
Plants
Arthraxon hispidus
Hairy-joint Grass
Vulnerable nationally and
in NSW
Dentella minutissima
Endangered in NSW
Eriocaulon carsonii
Salt Pipewort
Endangered nationally
and in QLD, NSW, and
SA
Eryngium fontanum
Endangered nationally
and in QLD
Myriophyllum artesium
Endangered in QLD
Myriophyllum implicatum
Rare in QLD and
presumed extinct in NSW
Sesbania erubescens
Sporobolus pamelae
Thelypteris confluens
4.5.2
Rare in QLD
Endangered in QLD
Vulnerable in QLD
Dawson River (spring 5)
Discharge springs in NSW
Caring, Cockatoo Creek, Edgbaston / Myross,
Lucky Last, Elizabeth Springs, Gosse, Hermit Hill,
Gammyleg, Moses, North West, Old Finniss, Peery
Lake, Petermorra, Public House, Reedy, Scotts
Creek, Sulphuric, Twelve, West Finniss, Yowah
Creek
Edgbaston / Myross, Moses
Caring, Carpet, Cockatoo Creek, Coreena,
Edgbaston / Myross, Elizabeth Springs, Granite,
Merimo, Moses, Paroo River, Smokey, Tungum,
Wooregym, Yowah Creek
Kennedy’s / McKenzies
Black
Coreena, Dead Sea Scrolls, Edgbaston / Myross,
Kennedy’s / McKenzies, Moses, Yowah Creek
Dawson River (spring 5)
Greenhouse gas abatement benefits
Method
Water flowing from artesian bores has been demonstrated to contain dissolved gas concentrates (methane and
carbon dioxide). It can therefore be assumed that any water saved under the GABSI program (ML/year) and
returned to the GAB will result in greenhouse gas abatement.
The economic value of greenhouse gas abatement achieved under GABSI should reflect the avoided socioeconomic costs associate with climate change.
26
http://www.environment.gov.au/cgi-bin/sprat/public/publicshowcommunity.pl?id=26&status=Endangered
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GABSI Value for Money Review
Key assumptions required to estimate these value include:

Carbon dioxide equivalent (CO2e) per ML of water discharged. A previous study (Pallasser et al, 2000
which explored emissions from 129 bores in the NSW GAB estimated that approximately 0.54 tonnes of
CO2 emissions are emitted per ML discharged. Given that this is the most comprehensive study available
on greenhouse gas emissions from GAB water, this value can be extrapolated to other jurisdictions

Average carbon price. The price for carbon can be used as a proxy for this cost where a carbon market
exists. However, given the lack of certainty regarding an appropriate carbon price in the Australian context,
an indicative value of $23/CO2e has been applied in the study. This is equivalent to the 2012/13 carbon tax
price and is considered to be a conservative estimate, given that the social cost of carbon is expected to
increase over time.
Metrics
The methodology and associated metrics applied to value the consumptive use of reallocated water are
presented in the following equation:
𝑮𝒓𝒆𝒆𝒏𝒉𝒐𝒖𝒔𝒆 𝒈𝒂𝒔 𝒂𝒃𝒂𝒕𝒆𝒎𝒆𝒏𝒕 𝒃𝒆𝒏𝒆𝒇𝒊𝒕
𝒚=𝟐𝟎𝟒𝟑
𝑴𝑳
= 𝑷𝑽( ∑ (𝑴𝑳/𝒚𝒆𝒂𝒓 𝒓𝒆𝒕𝒖𝒓𝒏𝒆𝒅 𝒕𝒐 𝑮𝑨𝑩 (
) × 𝑪𝑶𝟐(𝒆)/𝑴𝑳 × $/𝑪𝑶𝟐(𝒆)
𝒚𝒆𝒂𝒓
𝒚=𝟏𝟗𝟗𝟗
Where
𝑴𝑳/𝒚𝒆𝒂𝒓 𝒓𝒆𝒕𝒖𝒓𝒏𝒆𝒅 𝒕𝒐 𝒕𝒉𝒆 𝑮𝑨𝑩 = 𝑴𝑳 𝒔𝒂𝒗𝒆𝒅 × % 𝒐𝒇 𝒘𝒂𝒕𝒆𝒓 𝒓𝒆𝒕𝒖𝒓𝒏𝒆𝒅 𝒕𝒐 𝒕𝒉𝒆 𝒃𝒂𝒔𝒊𝒏
Table 20: Metrics for greenhouse gas abatement value
Metric
description
ML Saved / yr
GABSI
Phase 1
GABSI
Phase 2
GABSI
GABSI
Comment
Phase 3 (to Phase 3 (to
June 2013) June 2014)
18,353
14,997
9,444
11,490
% ML returned to
the Basin
66%
70%
69%
69%
Annual weighted average based on ML saved
within each jurisdiction and a requirement that at
least 50% of water saved be returned to the GAB
in SA, and at least 70% be returned to the GAB in
Queensland and NSW.
CO2(e) (tonne)
/ML
0.54
0.54
0.54
0.54
As discussed above, this is the only value
available based on a NSW study. This value is
assumed to be consistent across the GAB for the
purpose of this assessment.
$23/tonne
$23/tonne
$23/tonne
$23/tonne
As mentioned above, this is considered to be a
conservative estimate of the social cost of carbon.
Market data is not available given the uncertainty
of a future carbon market in Australia.
$/CO2(e)
Refer to Table 5.
Results
The total benefit associated with reduced greenhouse gas emissions across the assessment period (19992043) is $64.4 m (to June 2013) or $69.6 m to June 2014. A breakdown of results by jurisdiction is provided in
Figure 7.
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GABSI Value for Money Review
Figure 7: Total greenhouse gas abatement value ($ 2013, real)
4.6
Summary
The summary of the Value for Money assessment which is based on the TEV Assessment framework is split
into the following two sections:

Quantified value for money

Additional benefits discussed qualitatively
4.6.1
Quantified value for money
The total cost of GABSI to governments in real dollars is $241.2m to June 2013 or $268.05m to June 2014. In
present value the cost is $375.2m to June 2013 and $400.24m to June 2014.
Determining value for money requires a comparison of program specific costs and benefits. Table 21, Table 22,
Figure 8, and Figure 9 outline the total benefits quantified for GABSI over the assessment period, which are the
consumptive benefits from reallocated water, indirect benefits to communities, and greenhouse gas abatement
benefits.
In real dollars, these benefits up to June 2013 are estimated to be $163.0m or $176.7m if including works to be
completed over 2013/14. In present value, these respective figures are $209.9m to June 2013 and $221.4m to
June 2014.
Table 21: TEV quantified (real 2013 dollars)
Quantified values
Phase 1
Phase 2
Phase 3
(completed)
Phase 3
(completed
as planned)
TOTAL to
June 2013
TOTAL to
June 2014
Consumptive benefits
from reallocated water
$ 24.87 m
$ 18.21 m
$ 9.53 m
$ 14.39 m
$ 52.61 m
$ 57.47 m
$ 21.99 m
$ 16.10 m
$ 8.42 m
$ 12.27 m
$ 46.51 m
$ 50.81 m
$ 30.98 m
$ 23.40 m
$ 9.88 m
$ 15.23 m
$ 64.36 m
$ 69.61 m
$ 77.84 m
$ 57.71 m
$ 27.93 m
$ 42.34 m
$ 163.48 m
$ 177.89 m
Indirect benefits to rural
communities
Greenhouse gas
abatement benefits
Total
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GABSI Value for Money Review
Table 22: TEV quantified (present value dollars)
Phase 1
Phase 2
Phase 3
(completed)
Phase 3
(completed
as planned)
TOTAL to
June 2013
TOTAL to
June 2014
Consumptive benefits
from reallocated water
$ 52.36 m
$ 27.33 m
$ 10.19 m
$ 15.40 m
$ 89.88 m
$ 95.08 m
Indirect benefits to rural
communities
$ 22.79 m
$ 13.61 m
$ 4.62 m
$ 7.05 m
$ 41.02 m
$ 43.45 m
Greenhouse gas
abatement benefits
$ 46.28 m
$ 24.16 m
$ 9.01 m
$ 13.61 m
$ 79.45 m
$ 84.05 m
Total
$ 121.43 m
$ 65.09 m
$ 23.83 m
$ 36.06 m
$ 210.35 m
$ 222.58 m
Quantified values
Figure 8: TEV quantified (real 2013)
Figure 9: TEV quantified (present value)
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GABSI Value for Money Review
As discussed in Section 3.1, a BCR provides an indication of the total economic value provided by GABSI per
dollar invested in the program, which essentially represents return on government investment in GABSI. A BCR
of one would indicate that the benefits equals the costs, while a BCR of more than one suggests that the return
on investment exceeds the amount expended (and vice versa for a BCR of less than one).
As shown in Table 23 and Figure 10, the BCR for the whole of GABSI to date (for works completed to June
2013) is 0.56. The BCR decreases over the three phases of the program from 0.77 in Phase 1. However this
only includes the benefits that could be quantified, which account for only three of the nine benefits captured in
the full TEV framework. Furthermore, two of these elements only consider the value of less than 35% of the
water saved at each phase of GABSI (i.e. water that could be reallocated for consumptive purposes).
The BCR for Phase 1 was significantly higher than for Phases 2 and 3, likely due to jurisdictions prioritising the
works where they could achieve the greatest water savings first. This may also be due to a higher level of
landholder interest in this Phase as it followed on from other state funding programs which required a greater
landholder contribution. The phase also covered a period of good rainfall across most of eastern Australia
meaning that landholders had cash reserves to spend on the program.
Table 23: Quantified value for money summary (BCR)
Value per dollar
invested
Consumptive benefits
from reallocated water
Indirect benefits to rural
communities
Greenhouse gas
abatement benefits
Total
Phase 3
(completed)
Phase 3
(completed
as planned)
TOTAL to
June 2013
TOTAL to
June 2014
Phase 1
Phase 2
0.33
0.19
0.14
0.15
0.24
0.24
0.29
0.17
0.12
0.13
0.21
0.21
0.15
0.09
0.06
0.07
0.11
0.11
0.77
0.45
0.33
0.35
0.56
0.55
Figure 10: Quantified BCR by phase (all jurisdictions)
Figure 11 shows the BCR for each jurisdiction for the whole of GABSI to June 2013. South Australia has a
significantly higher BCR than Queensland and NSW, possibly due to the relatively smaller scale of the program
and ability for government to prioritise the bores to be controlled (SA landholders do not provide contributions in
the same way as in Queensland and NSW). Furthermore, South Australia was able to reallocate 50 per cent of
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GABSI Value for Money Review
water saved as per their implementation plan (compared to 30 per cent in NSW and Queensland), which
increases the total quantified benefits relative to the other jurisdictions.
Figure 11: Quantified BCR by Jurisdiction (total to June 2013)
A full summary of the costs and benefits across the full assessment period is provided in Appendix C.
4.6.2
Additional benefits discussed qualitatively
A summary of the benefits from GABSI which did not have the supporting data to be considered quantitatively is
summarised in the following table.
Table 24: Summary of TEV framework
TEV element
Evidence of benefit
Consumptive benefits
from improved
pressure

QLD – Increase in pressure in half of all artesian bores monitored – 341 having increased
by up to 8 m and 31 having increased by more than this (in 2005).

NSW – Around 90% of capped bores have either stabilised or increased pressure during
the period of GABSI (340 bores). ~12 bores have started to reflow in the last year or two. A
non-linear increase is expected over the next few years.

SA - Pressure recovery (10+kpa) observed at little Blyth bore over 17 month period which
can be attributed to decommissioning of Big Blyth bore (located 13km away).
Direct private
landholder benefits
The landowner benefits have not been included in the TEV given that the focus is on return on
government investment. However, if these benefits were included, there is evidence to suggest
that the VfM from the perspective of both landowners and government would be higher than the
VfM for government alone. This is because studies previously undertaken demonstrate that
benefits to landowners exceed their financial contribution to the program.
Tourism, recreation
and amenity benefits
Based on the previous study of the Dalhousie Springs complex (recreation benefits of
$0.6m/annum) there are likely to be some relatively minor but tangible recreation benefits
associated with the GABSI program.
Heritage benefits

QLD – 150 Indigenous cultural heritage sites have been recorded in relation to GAB spring
wetlands, however this is expected to be a lower estimate of the total number of sites.

NSW – significance to Aboriginal people has not been researched for the springs, but
Peery Lake has been designated a place of major cultural significance for Aboriginal
people of the Barkindji.

SA – has undertaken studies finding Indigenous cultural heritage sites in the GAB region,
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GABSI Value for Money Review
TEV element
Evidence of benefit
but these records are unavailable.
Option value, bequest
/ altruism, and
stewardship values
Unable to be quantified and no specific data for a robust qualitative assessment.
Conserving
biodiversity
GAB environmental assets are protected under various Commonwealth and State legislative
obligations. There are significant biodiversity values located at springs in the GAB, however a
clearer relationship between GABSI and improvement in the springs needs to be established.
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GABSI Value for Money Review
5.
Sensitivity analysis
Given the uncertainty associated with many of the assumptions, the sensitivity of key variables was tested to
assess the impact on the benefit cost ratio. Seven tests were conducted as follows:

Test 1: Discount rate of 3% (instead of 7%, consistent with Commonwealth Government guidelines).

Test 2: Discount rate of 10% (instead of 7%, consistent with Commonwealth Government guidelines).

Test 3: Market value of water allocated for consumptive use was tested at $613/ML (relative to the base
assumption of $804/ML). This is considered to be a more conservative estimate based on the lowest price
paid at the NSW Auction in 2009.

Test 4: Market value of water allocated for consumptive use was tested at $2,281/ML (relative to the base
assumption of $804/ML). This test reflects the average price for the five transactions in Qld (ranging from
$1,500 to $2,500).

Test 5: A carbon price of zero (relative to $23 dollars) was tested given the uncertainty of a future price of
carbon. However it should be noted that even if there is no market for carbon, the price on carbon within
the TEV assessment reflects the social cost of greenhouse gas emissions, not the financial costs.

Test 6: A doubling of the carbon price to $46 to reflect a higher social cost associated with emissions than
has been reflected by the carbon tax.

Test 7: Maximum of 50% of saved water being reallocated for consumptive use in Queensland, New South
Wales and South Australia (as opposed to 30% maximum assumed for Queensland and NSW in the
analysis). 50% is the upper limit in the National Partnership agreement, and is higher than what has been
captured in the Implementation Plans for Queensland and NSW.
The results (BCR or TEV/dollar invested) for the seven sensitivity tests are summarised in the table below.
Shaded tests indicate a higher BCR than in the base scenario.
Table 25: Sensitivity test results
TEV per dollar invested (BCR)
Phase 1
Phase 2
Phase 3
(to June
2013)
Phase 3
(to June
2014)
TOTAL to
June 2013
TOTAL to
June 2014
NA
0.77
0.45
0.33
0.35
0.56
0.55
1
Discount rate of 3%
0.86
0.51
0.37
0.39
0.60
0.59
2
Discount rate of 10%
0.74
0.43
0.31
0.34
0.55
0.55
3
WTP for new water - lower
limit at $613/ML
0.62
0.37
0.27
0.29
0.46
0.45
4
WTP for new water - upper
limit at $2,281/ML
1.93
1.11
0.82
0.88
1.40
1.37
5
Assumed carbon price is
zero
0.63
0.36
0.27
0.29
0.45
0.44
6
Assumed carbon price is
doubled ($40/tonne)
0.92
0.55
0.39
0.42
0.67
0.66
Maximum % of water reallocated for consumption
is 50%
1.04
0.66
0.47
0.51
0.78
0.77
7
Test
TEV
result
Variable tested
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GABSI Value for Money Review
Based on the above sensitivity test, Value for Money is most sensitive to the assumed market price used to
value the water allocated for consumptive use. As discussed in Section 4.1.1, there is significant uncertainty
about the market value to use given the limited groundwater trade data in the GAB. Furthermore, this market
price impacts two of the three values quantified in the assessment – direct consumptive value and the indirect
value to the community.
The other variable that has significant impact on the results is the percentage of water that can be reallocated. It
is important to note that whilst a higher allocation may increase the quantified TEV, benefits associated with
pressure recovery are no longer gained. Thus, reallocating 100% of the water does not necessarily have a
higher TEV than returning 50-70% of the water to the GAB.
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6.
Alternative evaluation approaches
Due to the uncertainty and lack of data available to fully assess the quantitative value for money of GABSI, the
following section outlines different approaches to considering value for money for the GABSI program. These
include:

TEV from alternative water use. This valuation approach estimates the TEV assuming that 100% of the
saved water is reallocated for consumptive use (rather than a maximum of 50% in SA and 30% in Qld and
NSW). This tests governments’ rationale that benefits of returning saved water to the GAB for the purpose
of pressure recovery is greater than (or at least equal to) the benefits of reallocating that same volume of
water for other consumptive purposes.

Breakeven benefit assessment. The breakeven assessment considers the benefits that would be
required for the TEV to at least equal the cost (i.e. to achieve a BCR of 1). In particular, in this study it
estimates the change in pressure that would be required for the consumptive benefit from pressure
recovery to increase such that a BCR of 1 is achieved.

Cost effectiveness assessment. This assessment compares the investment made per ML saved across
the GABSI program. The purpose is to compare the cost effectiveness across the program stages relative
to a benchmark based on planned expenditure and water savings in the Strategic Management Plan.
These approaches are discussed in more detail in the following sections.
6.1
TEV from alternative water use options (100% reallocation of GABSI water)
The TEV assessment undertaken in Section 4 is based on a minimum of 70% of all water being saved in NSW
and Queensland and 50% in South Australia. The saved water returned to the GAB aims to recover artesian
pressure and improve flows to bores and springs.
The rationale for this requirement is that the returned saved water delivers benefits that are greater than the
benefits of reallocating that same volume of water for other consumptive purposes. If this is the case, then the
consumptive value from reallocating all (100%) of the saved water can be taken as the minimum TEV from the
GABSI program.
As can be seen in Figure 12 the BCR under this approach is greater than 1 for Phase 1 (1.9), Phase 2 (1.2),
and for the Program as a whole (1.4). Phase 3 has the lowest BCR, equal to 0.9 (based on works completed to
June 2013).
Figure 12: TEV per dollar invested if 100% of the saved water is reallocated for consumptive use
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GABSI Value for Money Review
Under this approach, the only benefits that are quantified are the direct consumptive benefits from reallocated
water and the indirect benefits to the community. Other use and non-use benefits such as greenhouse
abatement, recreation, amenity, tourism, and environmental benefits are linked to pressure recovery and are
therefore not realised if 100% of the saved water is allocated for consumptive use.
Whilst this approach provides an important perspective on the potential value of saved water, it assumes that
Government’s decision to return water to the GAB is based on evidence that confirms that benefits of pressure
recovery are greater than (or at least equal to) the benefits of reallocating that same volume of water for other
consumptive purposes (i.e. the long term increase in pressure from the program has greater value than the
short term return to the state from water sales). .
6.2
Breakeven benefit analysis
The primary objective of GABSI is to restore pressure to the GAB, with the associated benefits spanning the
use and non-use values in the TEV framework (refer to Figure 13).
Figure 13: Summary of benefits in TEV framework directly linked to GAB pressure recovery
As can be seen from the above figure, none of the benefits that are directly linked to restored pressure have
been quantified in the VfM assessment due to limited availability of data. A breakeven analysis has therefore
been undertaken to estimate the benefits that would be required to achieve a BCR of 1. Four benefits,
discussed in the following table, were considered in this assessment.
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Table 26: Benefits captured in the breakeven assessment
Benefit considered
Approach
Consumptive benefit
from improved
pressure – avoided
pump installation
costs
The break even assessment considers the number of new pumps that would need to be
avoided to achieve a BCR of 1 (for each GABSI phase and across the program as a whole).
Metrics used in this analysis are based on those discussed in Section 4.1.2.
Consumptive benefit
from improved
pressure – avoided
pumping costs
The metrics discussed in Section 4.1.2 to measure the avoided operational costs are based on
an average change in pressure head (lift) across the GAB. The breakeven assessment
therefore considers the average change in pressure (m) required within each phase of the
program and across the program as a whole to achieve a BCR of 1.
Biodiversity – avoided
loss of unique
ecosystems
Based on metrics discussed in Section 4.5.1 the breakeven assessment considers the avoided
loss (%) of unique ecosystem in the GAB that would need to be realised for a BCR of 1 to be
achieved.
Rolf (2008) identified biodiversity WTP values provided by Rolf et al (2000) as most applicable
to the GAB. These values estimate that households are willing to pay $5.65 (2013 dollars) for
15 years to avoid the loss of each one per cent of unique ecosystem.
The break even assessment applies these values to households in the GAB jurisdictions
(Queensland, NSW and South Australia) to determine the break even percentage of unique
ecosystems saved.
Biodiversity – avoided
loss of endangered
species
Based on metrics discussed in Section 4.5.1. The breakeven assessment considers the
avoided loss of endangered ecosystem in the GAB that would need to be realised for a BCR of
1 to be achieved.
From the same study above (Rolf et al, 2000) it was estimated that households are willing to
pay $17.48 (2013 dollars) for 15 years to avoid the loss of an endangered species
The break even assessment applies these values to households in the GAB jurisdictions
(Queensland, NSW and South Australia) to determine the break even number of endangered
species saved.
The following table summarises the breakeven assessment results. It is noted that each benefit has been
considered in isolation of the other benefits – i.e. realising a single one of these benefits to 100% of its potential
would achieve a BCR of 1. These metrics are based on the assumptions and descriptions outlined in section 4.
Table 27: Breakeven assessment results
GABSI
Phase 1
GABSI
Phase 2
GABSI
Phase 3 (to
June 2013)
GABSI
Phase 3 (to
June 2014)
TOTAL
GABSI (to
June 2013)
TOTAL
GABSI (to
June 2014)
375
1169
1209
1644
805
855
5
15
16
21
11
11
Breakeven avoided loss of
unique ecosystems (%)29
6%
18%
15%
20%
12%
13%
Breakeven avoided loss of
endangered species (#)30
0.02
0.06
0.05
0.07
0.04
0.04
Benefit / metric considered
Breakeven avoided number
of pumps installed (#)27
Average pressure change
(m) in the GAB for breakeven
avoided pumping costs28
27
Refer to section 4.1.2 for assumptions and approach
28
Refer to section 4.1.2 for assumptions and approach
29
Refer to section 4.5.1 for assumptions and approach
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The results vary across phases as would be expected based on the gap between the original BCR and a BCR
of 1, with Phase 1 presenting relatively smaller additional benefits that would need to be realised in order to
breakeven.
These benefits should be weighed up in the context of value for money. For example, pressure across the GAB
needs to recover by 11m on average to breakeven, which is realistic as an upper limit but ambitious as an
average. However given that each benefit was considered in isolation, less than 11m can be restored on
average for the BCR to reach a number greater than 1. Only 0.04 endangered species or 12-13% of unique
ecosystems would need to be protected for a BCR of 1, which are both achievable. If the breakeven benefits for
both of these biodiversity impacts were fully achieved, and only half the breakeven pressure was restored
(5.5m), and half the breakeven number of avoided pumps was delivered, the BCR could equal 1.7 (for actual
works to June 2013).
A BCR greater than 1 is therefore considered to be possible, especially given that some other benefits (e.g.
tourism, recreation, option value) were not explicitly considered in the analysis..
6.3
Cost effectiveness
During SKM’s 2013 mid-term review of the GABSI program, some stakeholders suggested that the value for
money of the GABSI program may be declining as bores that were easy to rehabilitate and contributed large
water savings had already been completed.
A cost-effectiveness analysis (CEA) is a useful tool to compare how the costs of the program are changing over
time and to test whether the effectiveness of new expenditure is declining. A CEA is generally used to
determine and compare the cost of achieving a given physical target across a number of options. For the
purpose of this assessment, the CEA compares the cost of achieving a ML of water saving over the course of
the GABSI program.31
It is important to note that a CEA does not quantify the benefit of achieving the physical target (ML saved), and
does not consider the full range of benefits that may be achieved. As such, the CEA does not assess the value
for money of an investment, but is a useful tool to compare the cost effectiveness of works being undertaken to
achieve a common target. Importantly, this framework also enables the cost effectiveness of each phase of the
program to be compared to the planned (or targeted) cost-effectiveness when the program was initially
established.
The program was initially established through the GAB Strategic Management Plan (GABCC, 2000). This plan
estimated that GABSI implementation would cost $28632 million (at a minimum) over the 15 year implementation
period (or $336.6 million in 2013 dollars33). It was also estimated that this expenditure would lead to annual
water saving of approximately 200,000 ML. 34
For the purpose of this assessment, it has been assumed that water saving per dollar of planned investment is
constant throughout the life of the project, at $1,682/ML/annum (2013 dollars). This is a simplistic assumption
given that, there has been a diminishing return on water savings per dollar invested over the three GABSI
phases (discussed in more detail below). However, given the lack of information available on the initial GABSI
projections, $1,682/ML/annum is considered to be an appropriate benchmark for assessing the relative
performance of GABSI over time.
30
31
32
33
34
Refer to section 4.5.1 for assumptions and approach
Whilst not the direct objective of the GABSI, the program delivers water savings, of which at least half is returned to the basin to
restore pressure. The remaining water saved can be re-allocated for consumptive use by the jurisdictions.
Note that this figure also included costs for achieving communication, social, environmental, heritage and research objectives.
It is assumed that the initial estimate was estimated in nominal dollars from 2000-2015. This has been escalated to 2013 dollars
based on annual escalation (http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0Sep%202013?OpenDocument)
Refer pages 19-20 of the GAB Strategic Management Plan for more detail on the basis of these figures.
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GABSI Value for Money Review
Table 28 summarises the expenditure35 and water saving results across the three GABSI phases and Figure 14
provides a more detailed breakdown by jurisdiction. The assessment shows that, overall, GABSI has exceeded
its planned performance from a cost effectiveness perspective. However it also indicates that over Phase 3
(including planned works for 2013/14), the cost effectiveness has started to exceed the initial benchmark cost.
This is a result of the jurisdictions’ approaches to prioritising the works. Generally works that had strong
landholder contribution (noting that landholder contributions were not required in SA), provided the greatest
contribution to pressure recovery, and / or were technically more feasible were undertaken first, with
increasingly challenging projects being attempted in Phase 3 (e.g. bores which are capped but fail to be
controlled and therefore require significant rework) or more complex/deeper bore rehabilitation. This is
particularly prominent in South Australia, where priorities were relatively less driven by landholders and could
therefore be primarily based on technical feasibility. This is reflected in South Australia’s sudden increase in
cost effectiveness in Phase 3 relative to NSW and Queensland.
Table 28: Cost effectiveness summary across GABSI phases ($ 2013, real)
GABSI Phase
Expenditure (real 2013)
ML/annum saved
$/ML/annum saved
GABSI 1
$ 76.65 m
91,767
$835
GABSI 2
$ 95.95 m
74,984
$1,280
GABSI 3 (to June 2013)
$ 66.08 m
37,775
$1,749
TOTAL to date (actual, to June
2013)
$ 238.68 m
204,526
$1,167
Program benchmark
$ 336.6 m
200,000
$1,682
Figure 14: Cost effectiveness summary by jurisdiction and program phase
35
The expenditure included only refers to capital expenditure.
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GABSI Value for Money Review
7.
Conclusion
A TEV approach was used to assess government’s VfM of the GABSI program across the three phases
between 1999/2000 to 2012/13. Due to limited availability of data, a relatively small proportion of the total TEV
could be quantified. The aspects quantified include:

Consumptive benefits from reallocated water

Indirect benefits to rural communities

Greenhouse gas abatement benefits
Together, these benefits provided $163.5 m in real 2013 dollars or $210.4 m in present value for the full GABSI
program until June 2013. This equates to a benefit cost ratio (BCR) of 0.56, which was found to be decreasing
between phases over time. This reflects the change in priorities of the program and its target of 100%
rehabilitation. Critically however, these benefits primarily relate to water saved through GABSI, rather than
pressure recovery which is the other key focus of GABSI.
Benefits related to pressure recovery include:

Consumptive benefits from improved pressure

Tourism, recreation and amenity benefits

Heritage benefits

Option value, bequest / altruism, and stewardship values

Conserving biodiversity
These benefits were unable to be quantified given study scope and data constraints, however there is
significant qualitative and anecdotal evidence supporting the existence of these benefits associated with GABSI.
While funds could be invested in investigations, studies and monitoring programs to quantify some of these
benefits, it is questionable as to whether the expenses involved would justify the benefits. The types of
considerations that could be taken into account to better quantify the value of GABSI include:

Improved water market information covering a greater period of time and geographic locations, particularly
in terms of the direct market value of GAB water

Data analysis and pressure modelling of bores and springs to better understand the direct relationship
between GABSI and pressure recovery

Investigations to determine the efficiency of water savings achieved through GABSI (e.g. how benefits may
be offset by increasing flows from remaining uncontrolled bores and springs).
Without such information being currently available, three alternative approaches to viewing the value and
performance of GABSI have been applied. These are:

TEV from alternative water use (refer Section 6.1). This approach tests the governments’ rationale that
benefits of returning saved water to the GAB for the purpose of pressure recovery is greater than (or equal
to) the benefits of reallocating that same volume of water for other consumptive purposes by assuming that
100% of the saved water is reallocated for consumptive use (rather than 50% in SA and 30% in Qld and
NSW). This approach loses the value of benefits associated with pressure recovery, but achieves an
overall BCR of 1.4.

Breakeven benefit assessment (refer Section 6.2). This assessment considers some of the benefits not
quantified in the TEV approach that would be required for the TEV to at least equal the cost (i.e. achieve a
BCR of 1). It assesses consumptive benefits from improved pressure (avoided number of pumps and
pumping costs), and avoided loss of unique ecosystems and endangered species. Each benefit was
considered in isolation, which means that only 0.04 endangered species of 13% of unique ecosystems
would need to be protected for a BCR of 1. Similarly, pressure across the GAB would need to recover by
11m on average to breakeven. If the breakeven benefits of both biodiversity impacts were fully achieved,
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GABSI Value for Money Review
and only half the breakeven pressure was restored (5.5m) and half the breakeven number of avoided
pumps delivered, the BCR would equal 1.7.

Cost-effectiveness (refer Section 6.3). This analysis compares how the costs of GABSI have changed
over time and whether the effectiveness (based on ML saved) of new expenditure is declining. It does not
consider the benefits of achieving the ML saved targets, so should not be viewed as a VfM assessment.
The initial planned cost-effectiveness as outlined in the GAB Strategic Management Plan can be used as a
benchmark for comparison purposes, and is set at $1,682/ML/annum (2013 dollars). To date, GABSI has
outperformed well beyond this benchmark by progressing its program of works at $1,167/ML/annum.
All of the assessment approaches applied in this study suggest that the effectiveness of the outcomes achieved
from GABSI over time has gradually declined. This is likely due to governments’ prioritisation of works
processes as described earlier, as well as a faster rate of increase in the price of construction and materials
relative to consumer price index (CPI) over the period of GABSI (refer Figure 15).
Figure 15: Building price index (BPI) increases relative to CPI over the GABSI period
Furthermore, the aim of GABSI is to rehabilitate 100 per cent of bores nominated under the SMP in order to
achieve the greatest pressure savings, so it is likely that benefits from previous phases as measured by the
current approach would diminish if GABSI is not completed. While it is assumed that all benefits achieved in
previous phases are preserved (or do not degrade) over future time, in reality the increased pressure will lead to
an incremental increase in losses via other bores. Thus, because the main contribution to overall benefits is the
monetary value of the groundwater that is saved and reallocated, later phases of the GABSI program act to
preserve these reallocated water benefits. However, in terms of restoring pressure to the aquifer system,
previous gains in pressure re-establishment will not erode over time. The BCR for earlier phases may remain
stable if pressure is able to be incorporated into the assessment, and the benefits of pressure re-establishment
far outweigh those from reallocating saved water.
Table 29 provides an overview of jurisdictions’ estimates of works under GABSI that will remain at June 2014.
The total expenditure figures include estimated Commonwealth, State, and landholder contributions. The
remaining works have a cost-effectiveness figure of $1,852/ML/annum, which is more expensive than the
benchmark discussed above, but also consistent with the view that the works to be completed in later stages
are potentially more technically challenging, may be less likely to contribute directly to continued pressure
recovery, or they may be on properties where the landholders are less / unwilling to participate. Furthermore,
when viewing the program as a whole the cost-effectiveness of completing GABSI would be $1,430/ML/annum,
which is still lower than the initial benchmark of $1,682/ML/annum. However, as per the comment above, costeffectiveness does not consider the benefits of achieving the ML saved targets, so should not be viewed as a
VfM assessment.
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Table 29: Estimated extension of GABSI required post-2013/14 (these are based on indicative estimates provided by
jurisdictions and have not been further validated)
Estimated remaining
works post-2013/14
SA
NSW
Queensland
Total
Number of bores to be
controlled
<30
238
215
483
0
1,150
5,540
6,690
Water saved (ML)
365
26,600
80,633
107,598
Total expenditure –
including Commonwealth,
State, and landholder
contributions ($m)
1.25
114
84
199.25
Cost-effectiveness
($/ML/annum)
3,425
4,286
1,042
$1,852
Kilometres of bore drains
to be deleted
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Appendix A. References
Australian Bureau of Statistics 2013, 6401.0 Consumer Price Index, Australia, Sep 2013, Australian Bureau of
Statistics, <http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0Sep%202013?OpenDocument>
(accessed 17 October 2013)
Bush Heritage Australia 2013, Edgbaston Reserve: Hope springs eternal, Bush Heritage Australia, <
http://www.bushheritage.org.au/places-we-protect/state_queensland/edgbaston> (accessed 31 October 2013)
Centre for International Economics and Resource and Policy Management 2003, Farm costs, benefits and risks
from bore capping and piping in the GAB: Consultant’s report, Centre for International Economics, Canberra.
Centre of international Economics 2003, Landholder contributions to the GABSI: Review and recommendations,
Department of Agriculture, Fisheries and Forestry, Canberra.
Commonwealth Department of Finance and Administration 2006, Handbook of cost-benefit analysis,
Department of Finance and Administration, <http://www.finance.gov.au/publications/financecirculars/2006/docs/Handbook_of_CB_analysis.pdf> (accessed 17 October 2013)
Commonwealth Department of the Environment 2013, The community of native species dependent on natural
discharge of groundwater from the Great Artesian Basin, Department of the Environment
<http://www.environment.gov.au/cgi-bin/sprat/public/publicshowcommunity.pl?id=26&status=Endangered>
(accessed 31 October 2013)
Commonwealth Office of Best Practice Regulation 2013, Commonwealth Guidance Note: Cost benefit analysis
in regulatory impact assessments, Department of Finance, Canberra.
Council of Australian Governments 2010, National Partnership Agreement on the GABSI, Standing Council on
Federal Financial Relations, Canberra.
Deloitte Access Economics 2013, Economic value of groundwater in Australia, National Centre for Groundwater
Research and Training.
Destination NSW nd, ‘Facts & Figures’, NSW Government, <http://www.destinationnsw.com.au/tourism/factsand-figures> (accessed 31 October 2013)
Fraenkel PL 2013, “Water lifting for irrigation”, Natural Resources Management and Environment Department,
Food and Agricultural Organization of the United Nations, Rome.
GABCC 2000, GAB Strategic Management Plan, GABCC, Canberra.
Hassall & Associates Pty Ltd 2003, Review of the Great Artesian Basin Sustainability Initiative, Department of
Agriculture, Fisheries and Forestry, Sydney.
Marsden Jacob Associates 2012, Assessing the value of groundwater: Waterlines Report Series No 89,
National Water Commission, Canberra.
Hill CM, Flavel N & Eigeland 2010, Economic analysis of landholder water management under Cap & Pipe the
Bores program: case studies in the NSW Great Artesian Basin, NSW 54th Annual Conference of the Australian
Agricultural and Resource Economics Society, Adelaide, February.
NSW Office of Water 2010, NSW Great Artesian Basin water auction 2009: Final report, NSW Office of Water,
Sydney.
Outback 2011, “Bore baths, artesian spa, hot springs, the Great Artesian Basin, hot spots!”, Outback Now, <
http://www.outbacknow.com.au/index.php/articles/outback_itineries/bore_baths_artesian_spa_hot_springs_hot_
spots> (accessed 31 October 2013)
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Pallaser RJ & Alder D 2000, Greenhouse gas emissions from the Great Artesian Basin within New South
Wales: Potential for reducing the atmospheric carbon budget, Proceedings 5th International Conference on
Greenhouse Gas Control Technologies (13-16 August 2000), Cairns.
Paroo Shire Council nd, Artesian Time Tunnel, Paroo Shire Council, < http://www.paroo.qld.gov.au/artesiantime-tunnel> (accessed 31 October 2013)
Queensland Department of Natural Resources and Mines 2012, Great Artesian Basin Water Resource Plan:
Five year review, Queensland Department of Natural Resources and Mines, Queensland,
<http://www.dnrm.qld.gov.au/__data/assets/pdf_file/0018/106029/5year-wrp-review.pdf> (accessed 17 October
2013)
Queensland Environmental Protection Authority (EPA) 2005, Wetland management profile: Great Artesian
Basin spring wetlands, Ecosystem Conservation Branch, EPA, Queensland,
<http://wetlandinfo.ehp.qld.gov.au/resources/static/pdf/resources/fact-sheets/profiles/p01718aa.pdf> (accessed
17 October 2013)
Rolfe J 2008, Associated off-farm economic values of saving water and restoring pressure in the Great Artesian
Basin, Department of the Environment, Water, Heritage and the Arts.
Schalk T, Hill CM, Flavel N 2010, NSW Great Artesian Basin water market assessment pre and post action, 54 th
Annual Conference of the Australian Conference of the Australian Agricultural and Resource Economics
Society, Adelaide, February.
Sinclair Knight Merz 2008, Great Artesian Basin Sustainability Initiative: Mid-term review of phase 2,
Department of the Environment and Water Resources, Brisbane.
Sinclair Knight Merz 2013, Great Artesian Basin Sustainability Initiative Phase 3: Mid-term Review, Department
of Environment, Canberra.
Smerdon BD, Ransley TR, Radke BM & Kellett JR 2012, Water resource assessment for the Great Artesian
Basin: A report to the Australian Government from the CSIRO Great Artesian Basin Water Resource
Assessment, CSIRO Water for a Healthy Country Flagship, Australia.
South Australian Tourism Commission 2012, Flinders Ranges and Outback: Regional tourism profile June
2010-2012, South Australian Tourism Commission.
Tourism Research Australia 2011, The economic importance of tourism in Australia’s regions, Department of
Resources, Energy and Tourism, Canberra.
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Appendix B. Deprival method values
Table 30: Direct use value estimates from previous studies
Sector
$/ML
Approach/
Reference
Discussion
Irrigation
200
Deloitte Access
Economics, 2013
This value assumed that most irrigation enterprises using groundwater
would also have access to surface water. The deprival value has been
estimated as the average market price for surface water allocation trades
in the Murray Darling Basin.
Stock and
Domestic*
$1,278*
RMCG (2008)
This deprival value was based on the cost of small scale desalination of
saline groundwater as a standard alternative source of supply that was
considered to be widely applicable in Victoria.
Desalination is not considered to be applicable for the GAB. The cost of
the next best water supply alternative for Stock and Domestic agriculture
is expected to vary significantly depending on the location. As such, this
deprival estimate is not considered to be applicable to the GAB.
No other studies estimate the value per ML of water for the stock and
domestic sector.
Mining
$2,750
Deloitte Access
Economics, 2013
and MJA (2012)
Based on the cost range of piping water from short and long distances if
groundwater is not available.
Urban
Water
$2,000
Deloitte Access
Economics, 2013
Based on publically available figures regarding the most likely alternative
for urban water supply including demand management, purchase of
temporary water (where available) or short distance pipelines.
Other
Industries
$2,000
Deloitte Access
Economics, 2013
Assumed to be the same as urban water supply.
*Value adjusted to 2013 dollars
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Appendix C. Quantified Value for Money Summary
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